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Frequently Asked Questions on the Industrial Relations Code, 2020 and the Industrial Relations (Central) Rules, 2026

Posted On - 22 May, 2026

These FAQs have been prepared to provide clarity on key aspects of the Code on the Industrial Relations Code, 2020 (“IRC” or “Code”) (effective from November 21, 2025) and the Industrial Relations (Central) Rules, 2026 (effective from May 8, 2026) (“IR Rules”). It is intended as a practical guide for employers, HR professionals and industry stakeholders to navigate the evolving frameworks on worker protection while facilitating ease of doing business in India. 

  1. What is the objective and scope of the Industrial Relations Code, 2020?

The IRC is a central legislation that consolidates and amends the laws relating to trade unions, employment conditions in industrial establishments or undertakings, and the investigation and resolution of industrial disputes, thereby establishing a unified framework governing industrial relations.

  1. What erstwhile labour laws does the IRC subsume?

The IRC consolidates and repeals the following 3 (three) central labour laws:

  1. The Trade Unions Act, 1926;
  2. The Industrial Employment (Standing Orders) Act, 1946; and
  3. The Industrial Disputes Act, 1947.

The IR Rules shall supersede the Industrial Disputes (Central) Rules, 1957 in so far as they relate to Part II and Parts V to VIII and the Industrial Employment (Standing Orders) Central Rules, 1946, consolidating these provisions under a single framework.

  1. To which establishments is the IRC applicable?

The IRC applies to “industrial establishments or undertakings” in which an “industry” is carried on.

The expression “industrial establishments or undertakings” has been defined under the Code as an establishment or undertaking in which any industry is carried on:

Provided that where several activities are carried on in an establishment or undertaking and only one or some of such activities is or are an industry or industries, then,— (i) if any unit of such establishment or undertaking carrying on any activity, being an industry, is severable from the other unit or units of such establishment or undertaking which is not carrying on or aiding the carrying on of any such activity, such unit shall be deemed to be a separate industrial establishment or undertaking; (ii) if the predominant activity or each of the predominant activities carried on in such establishment or undertaking or any unit thereof is an industry and the other activity or each of the other activities carried on in such establishment or undertaking or unit thereof is not severable from and is, for the purpose of carrying on, or aiding the carrying on of, such predominant activity or activities, the entire establishment or undertaking or, as the case may be, unit thereof shall be deemed to be an industrial establishment or undertaking.

Further, the term “industry” is defined widely under the Code to include, any systematic activity carried on by cooperation between an employer and worker (whether such worker is employed by such employer directly or by or through any agency, including a contractor) for the production, supply, or distribution of goods or services with a view to satisfying human wants or wishes (not being wants or wishes which are merely spiritual or religious in nature), whether or not (i) any capital has been invested for the purpose of carrying on such activity; or (ii) such activity is carried on with a motive to make any gain or profit.

The following are expressly excluded from the purview of the definition of “industry”:

  1. Institutions owned or managed by organisations wholly or substantially engaged in charitable, social, or philanthropic services;
  2. Activities of the appropriate Government relatable to sovereign functions, including departments dealing with defence research, atomic energy, and space;
  3. Any domestic service; and
  4. Any other activity notified by the Central Government.
  1. How is the term “worker” defined under the IRC? Who is excluded from this definition and how does a “worker” differ from the erstwhile “workman” under the Industrial Disputes Act, 1947?

Under Section 2(zr) of the IRC, a “worker” is defined as “any person (except an apprentice as defined under the Apprentices Act, 1961) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical, or supervisory work for hire or reward, whether terms of employment are express or implied. The definition also includes working journalists and sales promotion employees and in relation to an industrial dispute, any person terminated in connection or as a consequence of that dispute or whose termination has led to that dispute.”

The following categories of persons are excluded from the definition of “worker”:

  1. Persons subject to the Air Force Act, 1950, the Army Act, 1950, or the Navy Act, 1957;
  2. Persons employed in police service or as officers/employees of a prison;
  3. Persons employed mainly in a managerial or administrative capacity; and
  4. Persons employed in a supervisory capacity drawing wages exceeding INR 18,000 per month (or such higher amount as may be notified by the Central Government from time to time).

It is significant to note that for the purpose of Trade Unions, the definition of “worker” is broader and includes all persons employed in trade or industry and includes home-based workers, self-employed workers and wage workers in the unorganised sector.

The definition of “worker” under the IRC marks a shift from the definition of “workman” under the Industrial Disputes Act, 1947 (“IDA”) by expanding its scope. The key differences from the erstwhile definition of “workman” under the IDA are as follows:

  1. Wage threshold for supervisory capacity: Under the IDA, supervisory employees drawing wages of INR 10,000 per month or more were excluded. The IR Code raises this threshold to INR 18,000 per month.
  2. Wider definition of workers: The IR Code explicitly recognises and includes working journalists and sales promotion employees.
  3. Broader Trade Union coverage: For the purpose of trade union provisions, the IR Code extends coverage to all persons employed in trade or industry, including workers in the unorganised sector.
  1. What are the thresholds for Standing Orders, and what are the obligations of employers with respect to the same? What are the consequence of non- compliance?

Standing Orders refer to orders dealing with matters listed in the First Schedule of the IRC, such as classification of workers, working hours, leave, attendance, termination, disciplinary action, and grievance redressal.

The key trigger for the applicability of Standing Orders is that they apply to every industrial establishment where 300 (three hundred) or more workers are employed or were employed on any day of the preceding 12 (twelve) months. Moreover, the provisions of Standing Orders do not apply to establishments where employees are governed by specific service rules such as the Fundamental and Supplementary Rules, the Indian Railway Establishment Code or other rules notified by the appropriate Government.

Key obligations on employers as regards Standing Orders:

  1. Draft Standing Orders: Within 6 (six) months of the IRC becoming applicable, the employer must prepare draft standing orders based on the Central Government’s model standing orders, ensuring that all matters specified in the First Schedule of the IRC are covered. However, Standing Orders existing at the time of enforcement of these provisions shall be deemed to be certified, as long as they are not inconsistent with the Code.
  2. Consultation: The employer must consult the Trade Union(s), recognised negotiating union, or negotiating council on the draft standing orders before forwarding the draft to the certifying officer.
  3. Modifications: In case of any observations, the employer must amend the standing orders within the prescribed period.
  4. Model Standing Orders:  In case the employer adopts the Central Government’s model standing orders, the standing orders are deemed to have been certified, and the employer shall forward this information to the certifying officer.
  5. Maintain Standing Orders: The employer is required to maintain the text of certified standing orders in such language(s) and in such manner for the information of the concerned workers.
  6. Subsistence Allowance: Standing orders must include provisions for paying workers placed under suspension pending disciplinary inquiry – 50% of wages for the first 90 (ninety) days and 75% thereafter (if delay is not attributable to the worker).
  7. Disciplinary Proceedings: Any investigations and inquiries into misconduct of worker must ordinarily be completed by the employer within 90 (ninety) days from the date of suspension.

Penalties for non-compliance with Standing Orders provisions range from INR 50,000 to INR 2 lakhs for failure to submit draft standing orders, and INR 1 lakh to INR 2 lakhs for contravening certified standing orders.

  1. What are the requirements for layoffs, retrenchment, and closure under the Code? What compensation are the workers entitled to in these events?

The IRC contains two separate chapters governing layoff, retrenchment, and closure based on the establishment size (i.e. in terms of the number of workers):

  1. Chapter IX of IRC which is applicable to factories, mines, and plantations employing 50 (fifty) or more workers on an average per working day and is not of seasonal nature. The keys provisions of this chapter are as follows:
    1. Layoff: If a worker who has completed not less than 1 (one) year of continuous service is laid off, the worker shall be paid by the employer for all days during which he is so laid-off, except for such weekly holidays and the worker shall be entitled to compensation equal to 50% of basic wages and dearness allowance. No compensation is payable beyond 45 (forty- five) days if there is an agreement to that effect.
    2. Retrenchment: The employer must: (i) give 1 (one) month’s written notice (or pay in lieu); (ii) pay retrenchment compensation equal to 15 (fifteen) days’ average pay per completed year of continuous service (or part thereof exceeding 6 (six) months); and (iii) serve a notice on the appropriate government.
    3. Closure: The employer must give a notice to the appropriate government stating the reasons for closure at least 60 (sixty) days prior to the intended closure.
  1. Chapter X of IRC which is applicable to factories, mines, and plantations employing 300 (three hundred) or more workers on an average per working day and is not of seasonal nature:
    1. Layoff: Prior permission of the appropriate government is mandatory, except in cases of power shortage, natural calamity, or in case of a mine, if the layoff is due to fire, flood, excess inflammable gas, or explosion. If no decision is communicated by the government within 60 (sixty) days, permission is deemed to be granted.
    2. Retrenchment: The employer must give 3 (three) months’ written notice (or pay in lieu) and must obtain prior permission of the appropriate government. If no decision is communicated within 60 (sixty) days, permission is deemed to be granted. Where the appropriate government grants permission (or permission is deemed granted), workers with at least one year of continuous service are entitled to compensation of 15 (fifteen) days’ average pay per completed year of service.
    3. Closure: The employer must apply for prior permission of the appropriate government stating the reasons for closure at least 90 (ninety) days before the intended closure. If no decision is communicated by the government within 60 (sixty) days, permission is deemed to be granted.

Additionally, in the event that an establishment (irrespective of the threshold of the number of workers it employs) has undergone a closure, every worker who has been in continuous service for not less than 1 (one) year immediately before such closure, shall be entitled to compensation as if such worker had been retrenched. If the establishment is closed down on account of an unavoidable circumstances beyond the control of the employer, the compensation to be paid to the worker shall not exceed his average pay for three months.

  1. What are the notice and compensation requirements for the retrenchment of workers? Does retrenchment mandate government approval?

Based on establishment size, retrenchment requirements shall be as follows:

  1. Establishments employing more than 50 (fifty) workers but fewer than 300 (three hundred) workers:
    1. Notice to worker: The employer must provide 1 (one) month’s written notice stating reasons for retrenchment (or pay in lieu of notice).
    2. Notice to government: The employer must serve a notice on the appropriate government (or a specified authority); however, prior government approval is not required.
    3. Compensation: The employer shall compensate an entrenched worker with 15 (fifteen) days’ average pay for every completed year of continuous service (or part thereof exceeding 6 (six) months).
  2. Establishments employing 300 (three hundred) or more workers:
    1. Notice to worker: The employer must provide 3 (three) months’ written notice stating reasons for retrenchment (or pay in lieu).
    2. Government Approval: The employer must obtain the prior permission of the appropriate government in the prescribed manner with a simultaneous notice to affected workers. If no decision is communicated within 60 (sixty) days, permission is deemed granted.
    3. Compensation: The employer shall compensate an entrenched worker with 15 (fifteen) days’ average pay per completed year of continuous service (or part thereof exceeding 6 (six) months).

Therefore, prior government approval is mandatory for retrenchment for establishments with more than 300 (three hundred) workers.

Employers should be mindful that retrenchment that is undertaken in contradiction to the provisions of the Code shall be deemed illegal and the workers shall be entitled to all benefits as if no notice of retrenchment had been given.

Additionally, it is noteworthy that, the last-in-first-out principle ordinarily applies to retrenchments i.e. in the absence of an agreement between the employer and the worker, the most recently employed worker in a particular category should ordinarily be retrenched first.

  1. How are strikes regulated and what are the consequences of commencing a strike in violation of the statutory provisions?

Section 2(zk) of the IRC defines “strike” to mean a cessation of work by a body of persons acting in combination or a concerted refusal or refusal under a common understanding of any number of persons who are or have been so employed to continue to work or to accept employment and includes the concerted casual leave taken on a given day by 50% or more of the workers employed in an industry.

In accordance with Section 62 of the Code, no person employed in an industrial establishment can go on a strike in breach of contract:

  1. Without giving notice of strike to the employer within 60 (sixty) days before striking;
  2. Within 14 (fourteen) days of giving such notice;
  3. Before the expiry of the date of strike specified in the notice;
  4. During the pendency of conciliation proceedings and 7 (seven) days after conclusion of such proceedings;
  5. During the pendency of proceedings before a Tribunal or National Industrial Tribunal (“NIT”), and 60 (sixty) days after conclusion; or
  6. During the pendency of arbitration proceedings before an arbitrator and 60 (sixty) days after the conclusion of such proceedings
  7. During any period in which a settlement or award is in operation in respect of the matters covered therein.

A strike commenced in violation of the provisions shall be illegal and workers participating in illegal strikes shall be punishable with a fine of INR 1,000 to INR 10,000 or imprisonment of up to 1 (one) month, or both.

Any person acting in furtherance of a strike which is illegal including knowingly spending or applying money, shall be punishable with fine INR 10,000 to INR 50,000 or imprisonment of up to 1 (one) month, or both.

  1. How has the definition of strike changed compared to the erstwhile laws?

Under the IDA, the definition of ‘strike’ was restricted to public utilities. However, it is noteworthy that the IRC has expanded the scope to cover all industrial establishments and not merely public utilities. Additionally, under the IRC, concerted casual leave of fifty percent or more of the workers shall be considered as a strike.

  1. What is the process for the recognition of a Trade Union under the IRC? What is the involvement of the employer in such process?

“Trade Union” has been defined in the Code to mean any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workers and employers, or between workers and workers, or between employers and employers or for imposing restrictive conditions on the conduct of any trade or business, and includes any federation of two or more Trade Unions.

The employer has no role in the registration of a Trade Union. However, once a Trade Union is registered by the Registrar of Trade Unions in the industrial establishment, the employer’s role becomes central at the stage of recognition of the negotiating union or negotiating council for the purpose of negotiating on such matters including wages, leaves, promotions and working conditions of workers.

The employer must also accord certain facilities to the recognised negotiating union or negotiating council as prescribed under the IR Rules such as:

  1. Maintain a notice board to display union/council activities.
  2. Provide a venue and necessary facilities for holding discussions.
  3. Provide a venue and necessary facilities for union members or council to hold discussions amongst themselves.
  4. Provide access to the workplace for union/council office bearers to check workers’ working conditions.
  5. Deduct the subscription of members with workers’ written consent.
  6. Ensure office bearers are treated as “on duty” when attending scheduled meetings with the employer.
  7. Provide office accommodation with facilities (if the establishment has 300 (three hundred) or more workers).
  1. What is a “negotiating union” or “negotiating council”?

Section 14 of the IRC has introduced a structured mechanism for collective bargaining through a “negotiating union” or “negotiating council” in industrial establishments that have registered Trade Unions. These bodies are the authorised counterparts for negotiation with the employer on matters pertaining to workers.

Single registered Trade Union: Where a single registered Trade Union is functioning in an industrial establishment and has a membership of not less than 30% of the total workers of the establishment, the employer must recognise such Trade Union as the sole negotiating union.

Multiple Trade Unions:

  1. If any one Trade Union has the support of 51% or more of the workers on the muster roll of the industrial establishment, that Trade Union is recognised as the sole negotiating union.
  2. If no Trade Union has 51% or more support, the employer must constitute a negotiating council consisting of representatives of registered Trade Unions that individually have the support of at least 20% of the total workers on the muster roll. Each qualifying Trade Union gets representation proportionate to its membership.

The recognition of the Trade Union by the employer is valid for 3 (three) years, extendable up to 5 (five) years by mutual agreement.

The negotiating union or the negotiating council shall negotiate with the employer on such matters including classification of grades and categories of workers, standing orders, wages and allowances, hours of work, health and safety conditions, housing/quarter allotment policy, welfare facilities, and other conditions of service.

  1. How does the Code regulate strikes and lock-outs? What are the notice requirements before a strike or lock-out can be initiated?

It is pertinent to note that the expressions “strike” and “lock-out” have both been defined in the Code (the definition of “Strike” has been provided in Q8 above).

“Lock-out” means the temporary closing of a place of employment, or the suspension of work, or the refusal by an employer to continue to employ any number of persons employed by him.

Sections 62 to 64 of the IRC govern the provisions of strikes and lock-outs in an industrial establishment.

No person employed in an industrial establishment can go on strike in breach of contract—

  1. Without giving 60 (sixty) days’ advance notice of strike to the employer;
  2. Within 14 (fourteen) days of giving such notice;
  3. Before the expiry of the date specified in the strike notice;
  4. During the pendency of conciliation proceedings before a conciliation officer and 7 (seven) days after conclusion;
  5. During the pendency of proceedings before a Tribunal or NIT and 60 (sixty) days after conclusion; or
  6. During the pendency of arbitration proceedings (where notification has been issued) and 60 (sixty) days after conclusion.

Similarly, no employer can lock-out any worker—

  1. Without giving 60 (sixty) days’ advance notice of lock-out;
  2. Within 14 (fourteen) days of giving such notice;
  3. Before expiry of the date of lock-out specified in the notice;
  4. During the pendency of conciliation proceedings and 7 (seven) days after conclusion; or
  5. During the pendency of Tribunal/NIT proceedings and 60 (sixty) days after conclusion
  6. During the pendency of arbitration proceedings before an arbitrator and 60 (sixty) days after the conclusion of such proceedings
  7. During any period in which a settlement or award is in operation, in respect of any of the matters covered by the settlement or award.

The notice of strike or lock-out shall not be necessary where there is already in existence a strike or a lock-out, but the employer shall send intimation of such lock-out or strike on the day on which it is declared, to the appropriate Government authority.

  1. What are an employer’s obligations under the Code for strikes and lock-outs?

Where an employer receives strike notices from workers or gives lock-out notices, the employer must within 5 (five) days report to the appropriate government (or the specified authority) and the conciliation officer, the number of such notices received or given on that day. This ensures transparency and allows the authorities to initiate conciliation or other disputeresolution measures promptly.

  1. What are the penalties prescribed for non-compliance with provisions relating to layoffs, retrenchment, closure or lock-outs by employers? Can directors, managers, or other officers of a company be held personally liable for offences committed by the Company under the Code?

The IRC prescribes the following penalties for non-compliance by employers in the case of:

  1. Layoff, retrenchment, and closure in establishments with 50 (fifty) or more workers):
    1. Punishment with a fine of not less than INR 50,000, extendable up to INR 2 lakhs.
    2. Subsequent offence after first conviction shall be punishable with a fine of not less than INR 1 lakh, extendable up to INR 5 lakhs, or imprisonment of up to 6 (six) months, or both.
  2. Layoff, retrenchment, and closure in establishments with 300 (three hundred) or more workers):
    1. Punishment with a fine of not less than INR 1 lakh, extendable up to INR 10 lakhs.
    2. Subsequent offence after first conviction shall be punishable with a fine of not less than INR 5 lakhs, extendable up to INR 20 lakhs, or imprisonment of up to 6 (six) months, or both.
  3. Lock-outs:
    1. An employer who has conducted an illegal lock-out shall be punishable with a fine of INR 50,000 to INR 1 lakh, or imprisonment up to 1 (one) month, or both.

Corporate liability: Where the offender is a company, every person who was in charge of and responsible for the conduct of the company’s business at the time of the offence shall also be deemed guilty, unless they prove the offence was committed without their knowledge and they exercised all due diligence to prevent it. Hence, directors, managers, secretaries, or other officers who consented to, connived in, or whose negligence resulted in the offence may also be held personally liable.

  1. What protection is given to workers during pendency of proceedings in industrial disputes?

Industrial dispute is defined as any dispute or difference between employers and employers or between employers and workers or between workers and workers which is connected with the employment or non-employment or the terms of employment or with the conditions of labour, of any person and includes any dispute or difference between an individual worker and an employer connected with, or arising out of discharge, dismissal, retrenchment or termination of such worker.

The IRC provides the following protections to workers during the pendency of industrial dispute proceedings before a conciliation officer or an arbitrator or a Tribunal or NIT:

  1. Conditions of service to remain unchanged (Section 90): An employer cannot, without the express written permission of the authority before which proceedings are pending, alter, to the prejudice of workers and protected workers concerned in the dispute,  the conditions of service applicable immediately before the commencement of proceedings, or discharge/punish workers connected with the dispute, except with the express written permission of the authority before which proceedings are pending.

A “protected worker” is defined as a member of the executive or office-bearer of a registered Trade Union connected with the establishment.

  1. Relief in wrongful dismissal cases (Section 50): Where a Tribunal or NIT is satisfied that an order of discharge, dismissal, or termination is not justified, it may set aside the order and direct reinstatement on such terms and conditions as it thinks fit, or award lesser punishment in lieu of discharge or dismissal or termination, as the circumstances require.
  2. Full wages during appeal proceedings (Section 56): Where a Tribunal awards reinstatement of a worker and the employer challenges the award in the High Court or Supreme Court, the employer is liable to pay full last-drawn wages to the reinstated worker during the pendency of those proceedings (subject to the court’s satisfaction that the worker was not otherwise employed and earning adequate remuneration).
  1. What are employer obligations under the Code?

Employers are subject to the following key obligations under the IRC:

  1. Bi-partite forums and dispute resolution:
    1. Where directed by the appropriate government, constitute a Works Committee as applicable, to promote amity and good relations between employer and workers.
    2. Constitute a Grievance Redressal Committee, as applicable, for resolution of individual grievance disputes.
  2. Trade union and collective bargaining:
    1. Recognise a negotiating union or constitute a negotiating council in establishments where registered Trade Unions function.
    2. Provide prescribed facilities to the negotiating union or negotiating council including notice boards, meeting venues, office accommodation, and access facilities.
  3. Standing orders:
    1. Prepare and submit draft standing orders to the certifying officer within six months of the standing orders provisions becoming applicable (for establishments employing 300 (three hundred) or more workers).
    2. Display certified standing orders in a legible manner in the language(s) of the workers.
    3. Pay subsistence allowance to suspended workers pending disciplinary enquiry.
  4. Notice of change in conditions of service:
    • Give at least 21 (twenty-one) days’ advance written notice to the workers before effecting any change in conditions of service such as wages, contributions, allowances, hours of work, leave and holidays etc. as specified in the Third Schedule to the Code.
  5. Layoff obligations:
    1. Maintain muster rolls even during periods of layoff.
    2. Pay layoff compensation to eligible workers.
    3. Obtain prior government permission for layoff in establishments with 300 (three hundred) or more workers (except in cases of power shortage, natural calamity, or specific mine emergencies).
  6. Retrenchment obligations:
    1. Give requisite notice to affected workers concerning the retrenchment.
    2. Pay retrenchment compensation i.e. 15 (fifteen) days’ average pay per completed year of continuous service.
    3. Serve notice on the appropriate government or obtain prior government permission, as the case may be.
    4. Give preference in re-employment to retrenched workers if re-hiring occurs within one year of retrenchment.
    5. Contribute to the Worker Re-skilling Fund an amount equivalent to 15 (fifteen) days’ last-drawn wages for each retrenched worker within10 (ten) days of retrenchment.
  7. Closure obligations:
    1. Give 60 (sixty) days’ prior notice to the appropriate government before closing an establishment employing 50 (fifty) or more workers.
    2. Apply for prior permission at least 90 (ninety) days before the intended closure date for establishments employing 300 (three hundred) or more workers.
  8. Strikes and lock-outs:
    1. Give 60 (sixty) days’ advance notice before a lock-out and observe the cooling-off period of 14 (forty) days after giving notice.
    2. Within 5 (five) days of receiving strike notices or giving lock-out notices, report the number of such notices to the appropriate government and the conciliation officer.
  9. Prohibition of unfair labour practices:
    1. Not engage in any of the unfair labour practices such as interfering with workers’ trade union rights, discrimination or victimisation for union activity, refusal to bargain in good faith, illegal lock‑outs or dismissals, acts such as favouritism, misuse of temporary contracts, failure to implement settlements, and coercive measures during strikes, as specified in the Second Schedule to the Code.
    2. Compliance with awards and settlements:
    3. Comply with and give effect to any settlement or award that is binding under the Code.
  1. What is “fixed term employment” under the IRC and what protections do fixed-term employees have?

Section 2(o) of the IRC defines “fixed term employment” as the engagement of a worker on the basis of a written contract of employment for a fixed period. The Code introduces significant protections for fixed-term employees to bring parity with permanent workers which include:

  1. Equal pay and benefits: The wages, allowances, and other benefits of a fixed-term employee must not be less than those of a permanent worker doing the same or similar work.
  2. Proportionate statutory benefits: The fixed-term employees shall be eligible for all statutory benefits proportionately according to their period of service, even if they do not complete the qualifying period required by a statute.
  3. Gratuity eligibility: A fixed-term employee shall be entitled to gratuity if they render service under the contract for a period of 1 (one) year (as opposed to the previously held 5 (five) year qualifying period).

Importantly, the termination of a fixed-term employment contract on its expiry or under a stipulation in the contract is expressly excluded from the definition of “retrenchment” under the IRC. This means fixed-term employees have no claim to retrenchment compensation upon the natural expiry of their contract.

  1. What is the Worker Re-skilling Fund and what are the employer’s obligations towards it?

Section 83 of the IRC provides for the establishment of a Worker Re-skilling Fund by the appropriate Government.

The employer’s obligations towards the Worker Re-skilling Fund are:

Contribution: The employer of an industrial establishment is required to contribute to the Worker Re-skilling Fund an amount equal to fifteen days’ wages last drawn by each retrenched worker immediately (or such other number of days as may be notified by the Central Government) within 10(ten) days from the date of retrenchment  and any contribution from other sources as may be prescribed by the appropriate Government.

Utilisation: The fund is to be utilised by crediting fifteen days’ wages to the bank account of each retrenched worker within 45 (forty-five) days of the retrenchment. The manner of utilisation is to be prescribed by the appropriate government.

It is pertinent to note that the contribution to the Worker Re-skilling Fund is a separate obligation from and in addition to the retrenchment compensation payable by an employer under Section 70 or Section 79 for establishments with 300 (three hundred) or more workers, as the case may be.

  1. What are “unfair labour practices” under the IRC and what are the consequences of engaging in them?

An “unfair labour practice” has been defined in the code to mean any of the practices specified in the Second Schedule to the Code.

The Second Schedule of the Code enlists several acts as unfair labour practices by employers, including:

  1. Interfering with, restraining, or coercing workers in the exercise of their rights to organise or participate in Trade Union activities;
  2. Dominating or interfering in the formation or administration of any Trade Union;
  3. Establishing employer-sponsored Trade Unions;
  4. Discriminating against workers for engaging in Trade Union activities;
  5. Failing to implement obligations under an award or settlement;
  6. Engaging in “go-slow” tactics or adopting other delaying practices.

The Second Schedule of the Code enlists several acts as unfair labour practices by  workers and trade unions of workers, including:

  1. Supporting or instigating strikes that are illegal.
  2. Forcing workers to join or not join a union; includes obstructive picketing, threats, or violence.
  3. Recognised union refusing to negotiate honestly with the employer.
  4. Coercive actions affecting certification of bargaining representatives.
  5. Practices like go-slow, gherao, squatting after work hours.
  6. Demonstrations at residences of employers/managerial staff.
  7. Encouraging or causing damage to employer’s property.

It is pertinent to note that Section 84 of the IRC expressly prohibits employers, workers, and Trade Unions (whether registered or not) from engaging in any “unfair labour practice”.

Consequences: Any person committing an unfair labour practice is punishable with a fine of not less than INR 10,000, which may extend to INR 2 lakhs. For a second or subsequent offence, the penalty is a fine of not less than INR 50,000, extending to INR 5 lakhs, or imprisonment up to 3 (three) months, or both.

  1. What are the employer’s obligations regarding “notice of change” in conditions of service?

Section 40 of the IRC requires every employer who proposes to effect any change in the conditions of service applicable to workers in respect of matters specified in the Third Schedule to the Code to: (i) give advance written notice to workers likely to be affected by such change; and (ii) not effect the change within 21 (twenty one) days of giving such notice.

The Third Schedule covers matters such as wages, allowances, hours of work, leave, manner of work, and similar conditions of employment.

However, no notice is required to be given in the following situations:

  1. Changes effected pursuant to a settlement or award;
  2. Changes applicable to workers governed by specified service rules (e.g., government employees, railway employees);
  3. Changes required in emergent situations relating to shift or shift working, in consultation with the Grievance Redressal Committee; or
  4. Changes directed by the appropriate government.

In the event a dispute is pending before a conciliation officer, arbitrator, or Tribunal, the employer cannot alter conditions of service connected with that dispute to the prejudice of workers, even after giving notice, without the express written permission of the relevant authority.

  1. What is the significance of the Industrial Relations (Central) Rules, 2026, and what are their key provisions?

The IR Rules, replace the Industrial Disputes (Central) Rules, 1957 and the Industrial Employment (Standing Orders) Central Rules, 1946.

Key provisions of the IR Rules relevant to employers include:

  1. Settlements: The form and process for settlements reached during and outside conciliation proceedings are laid down in the IR Rules.
  2. Works Committee: Detailed rules for constitution, election process, qualifications of members, meetings, and dissolution of the committee.
  3. Grievance Redressal Committee: Guidelines for choosing members, application process for aggrieved workers, and reference to conciliation.
  4. Negotiating Union/Council Recognition: The IR Rules lay down the matters for negotiation between the negotiating union/ council and employers as well as the criteria for the recognition process, verification, tenure, and facilities to be provided to members of Trade Unions.
  5. Standing Orders: Guidelines for forwarding information regarding adoption of model standing orders, certification process, authentication, displaying standing orders, and register maintenance.
  6. Matters for negotiation: The IR Rules enumerate the matters on which the negotiating union/council can negotiate with the employer, covering wages, hours of work, leave, safety, welfare, and other service conditions.
  7. Forms: The IR Rules specify the prescribed forms for giving notices of changes in conditions of service, retrenchment and intended closure.
  1. What is the Works Committee and the Grievance Redressal Committee, when are they established and what are the employer’s obligations in relation to them?

In accordance with Section 3 of the IRC, the appropriate Government may, by general or special order, require the employer of an industrial establishment employing 100 (one hundred) or more workers to constitute a Works Committee which shall include representatives of both the employer and workers.

The Works Committee’s duty is to promote measures for securing and preserving amity and good relations between the employer and workers, comment on matters of common interest or concern, and attempt to resolve material differences of opinion.

In accordance with Section 4 of the IRC, every industrial establishment employing 20 (twenty) or more workers must have one or more Grievance Redressal Committees, with equal numbers of employer and worker representatives for the purpose of resolving disputes arising out of individual grievances. Workers may file applications within 1 (one) year of the cause of action.

The employer is responsible for constituting both these bodies and for facilitating the election/nomination of worker representatives. Failure to constitute these bodies could result in penalties under the general non-compliance provision of the IRC (fine up to INR 1 lakh)

  1. What are the rights of workers when the ownership or management of an establishment is transferred to a new employer?

Where the ownership or management of an establishment is transferred, whether by agreement or by operation of law, every worker who has completed at least 1 (one) year of continuous service immediately before such transfer is entitled to notice and compensation, as if the worker had been retrenched. However, such compensation is not payable where:

  1. the worker’s service remains uninterrupted after the transfer;
  2. the terms and conditions of service after the transfer are not less favourable than those applicable before the transfer; and
  3. the new employer is legally liable to pay retrenchment compensation in the future by treating the worker’s service as continuous and uninterrupted.

Disclaimer: The information contained in this document is not legal advice or legal opinion. The contents recorded in the said document are for informational purposes only and should not be used for commercial purposes. Acuity Law disclaims all liability to any person for any loss or damages caused by errors or omissions, whether arising from negligence, accident or any other cause.

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