Industrial Relations Code, 2020

The Industrial Relations Code is enacted to reform the present laws related to the recognition of trade unions to protect the workers' rights, conditions of employment in industrial establishments, employer-worker relationship, and settlement of the disputes arising in the industries.

The Code under 14 Chapters, with 104 Sections and 3 Schedules, integrates and simplifies the below-mentioned Acts relating to Trade Unions, Employment Conditions in Industrial Establishments and Undertakings, Investigation and Settlement of the Industrial Matters, and incidentally connected matters:

• The Trade Unions Act, 1926;
• The Industrial Employment (Standing Orders) Act, 1946; and
• The Industrial Disputes Act, 1947

Check out the specifics of the states shown below.

• Introduces the term Industrial Relations with the intent to provide a broader framework for protecting the rights of workers, minimise frictions between the employers and workers, and redress and settle the differences.
• Provides for Fixed Term Employment, enabling such employees to receive the statutory benefits such as ESI, PF, Bonus and Wages, including Gratuity, like that of a permanent worker, other than the notice period after the conclusion of a fixed period, and retrenchment compensation.
• Re-defines the term Industry as any systematic activity carried on by co-operation between the employer and worker (including direct employment and employment through an agency or contractor) for the production, supply or distribution of goods or services with a view to satisfying human wants or wishes (except wants or wishes of a mere religious or spiritual nature), whether or not: (i) any capital has been invested for the purpose of carrying out such activity; or (ii) such activity is carried on with a motive to make a profit or gain. However, institutions owned or managed by organisations wholly or substantially engaged in charitable, social or philanthropic services, the activities of the appropriate Government constituting sovereign functions, and domestic services do not fall under this definition.
• Includes in the term Strike the concerted casual leave on a given day by 50% or more of the workers employed in an industry, and makes the mandatory notice of 14 days applicable not only to public utility services but to all establishments.
• Expands the definition of Worker to include supervisory staff getting wages up to ₹18,000 per month.
• Provides for the constitution of a negotiating union in an industrial establishment having registered trade unions, for negotiating with the employer.
• Has increased the threshold of the industrial establishments from 100 to 300 workers and mandates all such establishments to prepare Standing Orders on: (i) classification of workers, (ii) manner of informing workers about working hours, holidays, paydays and wage rates, (iii) suspension for misconduct, (iv) termination of employment, and (v) grievance redressal mechanisms for workers.
• Has introduced the concept of a Re-skilling Fund to provide training to retrenched workers.
• Mandates the employer to take prior approval from the appropriate Government in the event of lay-off, retrenchment or closure in mines, factories and plantations that are: (i) non-seasonal in nature, and (ii) have three hundred or more workmen.
• Introduces stringent penalty provisions: contravention of the provisions on lay-off, retrenchment or closure by an establishment attracts a fine of ₹1 lakh to ₹10 lakh for the first offence, and for a subsequent repeated offence a fine of ₹5 lakh to ₹20 lakh and/or imprisonment of up to 6 months.

The Code is applicable to the whole of India.

The Central Government has notified, in the Official Gazette (S.O. 5320(E)), 21 November 2025 as the date from which all the provisions of the Code are effective and operational. From that date, the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946 and the Industrial Disputes Act, 1947 stand repealed.

Works Committee

The appropriate Government may order an employer to constitute a Works Committee in an industrial establishment in which 100 or more workers are employed, or have been employed on any day in the preceding 12 months. The Committee should have an equal number of representatives of the employer and of the workers engaged in the establishment. The Works Committee has the duty of promoting measures to secure and preserve harmonious and good relations between the employer and workers.

Grievance Redressal Committee

Industrial establishments having 20 or more workers shall have one or more Grievance Redressal Committees to resolve disputes arising out of individual grievances. The Committee should have adequate representation of women workers, and its total members shall not exceed ten. It should have an equal number of representatives of the employer and of the workers engaged in the establishment. The chairperson of the Grievance Redressal Committee shall be selected from among the persons representing the employer and the workers, alternately, on a rotational basis every year.

An application in respect of any individual grievance or dispute may be filed before the Committee by any aggrieved worker within 1 year from the date on which the cause of action of the dispute arises. The Committee may complete its proceedings within 30 days of receipt of the application. A worker who is aggrieved by the decision of the Committee, or whose grievance is not resolved by the Committee within 30 days, may, within 60 days from the date of the decision or from the date on which the 30-day period expires, file an application for conciliation of the grievance with the conciliation officer through the Trade Union of which he or she is a member.

Any trade union having 7 or more members may register under the Code, electronically or otherwise. At the time of applying for registration, at least 10% of the workers or 100 workers, whichever is less, engaged or employed in the industry or industrial establishment with which the union is connected should be its members.

The Code introduces the concept of recognising a registered trade union in an industrial establishment as the negotiating union or council, to negotiate with the employer on matters the appropriate Government may prescribe.

Standing Orders apply to every industrial establishment that has 300 or more workers employed, or had them employed on any day of the preceding 12 months. They do not apply to workers of industrial establishments to whom the Fundamental and Supplementary Rules, Civil Services (Classification, Control and Appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave Rules, Civil Service Regulations, Civilians in Defence Service (Classification, Control and Appeal) Rules, the Indian Railway Establishment Code, or any other rules or regulations notified in this behalf by the appropriate Government, apply.

The model standing orders relating to the conditions of service and other incidental and connected matters shall be made by the Central Government.

Within 6 months from the date the Code becomes applicable, the employer should prepare a draft standing order based on the Central Government's model order for the matters specified in the First Schedule to the Code, and on any other matter the employer considers necessary to include given the nature of activity in its industrial establishment or undertaking, consistent with the Code and the First Schedule. While drafting the standing order, the employer should consult the trade union or the recognised negotiating union or council, and forward the draft electronically or otherwise to the Certifying Officer for certification. A standing order that adopts the Central Government's model order without any modification is deemed to have been certified, and the employer should send the information to the concerned Certifying Officer as prescribed.

On receiving the draft order, the Certifying Officer will issue a notice to the trade union or the negotiating union or council of the industrial establishment, seeking its comments. The Certifying Officer should complete the procedure for the draft standing order or the draft modifications within 60 days from the date of receipt, certify the draft or modifications, and send copies to the employer and to the trade union or negotiating union or council within 7 days. If this is not done, the draft or modifications are deemed to have been certified on the expiry of that period.

The existing standing orders of any industrial establishment at the commencement of the Code, if not inconsistent with the requirements of the Code, are deemed to be the certified standing orders under the Code.

The employer cannot make changes to the conditions of service applicable to any worker in respect of the matters specified in the Third Schedule:

• without giving reasonable notice to the workers about the proposed changes; or
• within 21 days of giving such notice.

The employer need not give any notice for effecting changes:

• where the change is effected in pursuance of any settlement or award;
• where the workers likely to be affected by the change are persons to whom the Fundamental and Supplementary Rules, Civil Services (Classification, Control and Appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave Rules, Civil Service Regulations, Civilians in Defence Service (Classification, Control and Appeal) Rules, the Indian Railway Establishment Code, or any other rules or regulations notified in this behalf by the appropriate Government in the Official Gazette, apply;
• in an emergent situation that requires a change of shift or shift working, otherwise than in accordance with the standing orders, in consultation with the Grievance Redressal Committee;
• where the change is effected in accordance with the orders of the appropriate Government, or in pursuance of any settlement or award.

Where any industrial dispute exists or is likely to arise, the employer and the workers may refer the dispute to arbitration. They have to execute a written agreement on the matters to be arbitrated, specifying the arbitrator or arbitrators and related terms, and forward a copy of the agreement to the appropriate Government and the Conciliation Officer.

When an industrial dispute has been referred to arbitration and the appropriate Government is satisfied that the persons making the reference represent the majority of each party, it may issue a notification. Once such a notification is issued, employers and workers who are not parties to the arbitration agreement but are concerned in the dispute shall be given an opportunity to present their case before the arbitrator or arbitrators.

Where the industrial dispute is a dispute other than the termination of an individual worker by way of discharge, dismissal, retrenchment or otherwise, the workers shall be represented before the arbitrator:

• where there is a negotiating union or negotiating council, by the negotiating union or negotiating council; or
• where there is no negotiating union or negotiating council, by the Trade Union; or
• where there is no Trade Union, by representatives of the workers chosen in the prescribed manner.

Where the industrial dispute relates to the termination of an individual worker by way of discharge, dismissal, retrenchment or otherwise, the worker concerned shall be represented in person or through a representative authorised by him or her.

Where an industrial dispute has been referred to arbitration and a notification has been issued, the appropriate Government may, by order, prohibit the continuance of any strike or lock-out in connection with the dispute that exists on the date of the reference.

Conciliation Officers

The appropriate Government may appoint as many persons as it thinks fit to be conciliation officers, charged with the duty of mediating in and promoting the settlement of industrial disputes.

A conciliation officer may be appointed for a specified area, for specified industries in a specified area, or for one or more specified industries, either permanently or for a limited period.

Industrial Tribunal

The appropriate Government may constitute one or more Industrial Tribunals for the adjudication of industrial disputes and for performing other functions assigned to them under the Code. The Tribunal also exercises the jurisdiction, powers and authority conferred on the Tribunal defined in clause (m) of section 2 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, by or under that Act.

The following cases are decided by a single Member of the Tribunal (the Judicial Member):

• the application and interpretation of standing orders;
• discharge or dismissal of workmen, including reinstatement of, or grant of relief to, workmen dismissed;
• illegality or otherwise of a strike or lock-out;
• retrenchment of workmen and closure of establishments; and
• Trade Union disputes.

The remaining cases are decided by a bench of the Tribunal.

National Industrial Tribunal

The Central Government may constitute one or more National Industrial Tribunals for the adjudication of industrial disputes that, in its opinion, involve questions of national importance or are of such a nature that industrial establishments situated in more than one State are likely to be interested in or affected by them.

Strikes

No person employed in an industrial establishment shall go on strike, in breach of contract:

• without giving the employer notice of strike, within sixty days before striking; or
• within fourteen days of giving such notice; or
• before the expiry of the date of strike specified in any such notice; or
• during the pendency of any conciliation proceedings before a conciliation officer and seven days after the conclusion of such proceedings; or
• during the pendency of proceedings before a Tribunal or a National Industrial Tribunal and sixty days after the conclusion of such proceedings; or
• during the pendency of arbitration proceedings before an arbitrator and sixty days after the conclusion of such proceedings, where a notification has been issued under sub-section (5) of section 42; or
• 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.

Lock-Outs

No employer of an industrial establishment shall lock-out any of its workers:

• without giving them notice of lock-out, within sixty days before locking-out; or
• within fourteen days of giving such notice; or
• before the expiry of the date of lock-out specified in any such notice; or
• during the pendency of any conciliation proceedings before a conciliation officer and seven days after the conclusion of such proceedings; or
• during the pendency of proceedings before a Tribunal or a National Industrial Tribunal and sixty days after the conclusion of such proceedings; or
• during the pendency of arbitration proceedings before an arbitrator and sixty days after the conclusion of such proceedings, where a notification has been issued under sub-section (5) of section 42; or
• 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.

Notice of strike or lock-out is not necessary where a strike or lock-out already exists, but the employer should send an intimation of the lock-out or strike, on the day on which it is declared, to the authority specified by the appropriate Government either generally, for a particular area, or for a particular class of services.

Where the employer receives or gives notices of strike or lock-out as mentioned above, it should report the number of such notices received or given on that day to the appropriate Government, or to the authority that Government prescribes, and to the conciliation officer, within 5 days.

A strike or lock-out shall be illegal if it is:

• commenced or declared in contravention of section 62; or
• continued in contravention of an order issued by the appropriate Government prohibiting the strike or lock-out where an industrial dispute has been referred to arbitration.

Where a strike or lock-out in pursuance of an industrial dispute has already commenced and is in existence at the time of filing the application relating to the dispute in the Tribunal, or of the reference of the dispute to an arbitrator or a National Industrial Tribunal, the continuance of the strike or lock-out shall not be deemed to be illegal, provided that it was not in contravention of the Code at its commencement and its continuance was not prohibited by an order of the appropriate Government.

A lock-out declared in consequence of an illegal strike, or a strike declared in consequence of an illegal lock-out, shall not be deemed to be illegal.

Knowingly spending or applying any money in direct furtherance or support of any illegal strike or lock-out is prohibited.

• Who is covered: Workers on the muster roll with at least one year of continuous service. Badli and casual workers are not covered.
• Compensation: 50% of the basic wages and dearness allowance the worker would have earned, for every day of lay-off.
• Limit: If lay-off goes beyond 45 days in a 12-month period, no further compensation is due unless the employer and worker have agreed otherwise. The employer may instead retrench the worker and pay retrenchment compensation.
• No compensation is payable if the worker turns down suitable other work within 5 miles, fails to present himself or herself for work at the appointed time each day, or is laid off because of a strike or go-slow in another part of the establishment.
• Where these rules do not apply: establishments with fewer than 50 workers on average per working day, seasonal or intermittent establishments, and establishments covered by Chapter X (300 or more workers), which need prior government permission instead.

A badli worker is someone employed in place of a worker whose name is on the muster roll. They stop being a badli worker after one year of continuous service.

An employer cannot retrench a worker with at least one year of continuous service unless it gives:

1. one month's written notice stating the reasons, or wages for the notice period instead
2. compensation of 15 days' average pay for every completed year of continuous service, or a higher number of days if the government notifies one
3. notice to the appropriate government in the prescribed manner

• Last in, first out: Within a category of workers, the worker employed last is normally retrenched first, unless the employer records reasons for doing otherwise.
• Re-employment: If the employer hires again within one year of retrenchment, retrenched workers who are citizens of India must be offered the chance to come back first.
• Transfer of undertaking: If ownership of the establishment changes, workers with one year of service are entitled to notice and compensation as if they had been retrenched. This does not apply if their service continues without a break, their terms are no less favourable, and the new employer is liable to pay retrenchment compensation based on their total service.

Service counts as continuous even when it is interrupted by sickness, authorised leave, an accident, a strike that is not illegal, a lock-out, or a stoppage of work that is not the worker's fault.

A worker who has not been in continuous service for the full period is treated as having completed:

Days of lay-off, leave with full wages, temporary disablement from an accident at work, and maternity leave all count as days worked.

• An employer must give the appropriate government at least 60 days' notice of its intention to close, with the reasons. This does not apply to establishments with fewer than 50 workers or to building, bridge, road, canal, dam or other construction work.
• The government can waive the notice where the closure is caused by an accident, the employer's death, or an extraordinary situation such as a natural calamity.
• Workers with one year of continuous service get the same notice and compensation as on retrenchment. If the closure is caused by circumstances beyond the employer's control, compensation is capped at 3 months' average pay.
• The following do not count as circumstances beyond the employer's control: financial difficulties or losses, accumulation of unsold stock, expiry of a lease or licence, and, for a mine, exhaustion of its minerals.
• Mines: No compensation is due if the employer offers other work within 20 km at the same pay, the worker's service stays continuous, and the employer remains liable for retrenchment compensation on the full service.
• Construction: No compensation is due if the project is completed within 2 years. Compensation is payable if it is not.

• For every worker it retrenches, the employer pays 15 days' last-drawn wages into the fund, or a higher number of days if the government notifies one. The fund can also receive money from other sources the government prescribes.
• The fund pays this amount to the retrenched worker within 45 days of retrenchment, to be used for re-skilling.

The Second Schedule lists practices that are unfair labour practices. Employers, workers and trade unions, registered or not, are all barred from committing them. Examples include interfering with workers' right to organise, victimising workers, refusing to bargain collectively in good faith, and taking part in or encouraging an illegal strike or lock-out.

The Ministry of Labour and Employment published draft Industrial Relations (Central) Rules in December 2025 and invited public comments. It notified the final Industrial Relations (Central) Rules, 2026 on 8 May 2026. These rules replace the Central rules made under the three repealed Acts:

• Industrial Disputes (Central) Rules, 1957
• Industrial Tribunal (Central Procedure) Rules, 1954
• Industrial Employment (Standing Orders) Central Rules, 1946
• Central rules under the Trade Unions Act, 1926

Each state notifies its own rules for establishments where the state is the appropriate government.

Average Pay

The average of the wages paid to a worker over a fixed period before the date the amount becomes payable. The period is three calendar months for a monthly-paid worker, four complete weeks for a weekly-paid worker and twelve full working days for a daily-paid worker. If the worker has not worked that long, the average is worked out over the period actually worked.

Employee

Anyone employed in an establishment to do skilled, semi-skilled or unskilled, manual, operational, supervisory, managerial, administrative, technical or clerical work for hire or reward. Members of the Armed Forces and apprentices are not employees.

Employer

A person who employs workers directly or through a contractor. For a government establishment, it is the authority the government names, or the head of the department if none is named. The term also covers the occupier of a factory, a manager with control of the establishment, a contractor, and the legal representative of a deceased employer.

Fixed Term Employment

Employment under a written contract for a fixed period. The worker's hours, wages, allowances and other benefits must be no less than those of a permanent worker doing the same or similar work. The worker gets all statutory benefits in proportion to the period of service, and is eligible for gratuity after one year.

Industry

Any systematic activity carried on through cooperation between an employer and workers to produce, supply or distribute goods or services meant to satisfy human wants, other than wants that are spiritual or religious in nature. Charitable, social or philanthropic activity, the sovereign functions of government and domestic service are excluded.

Industrial Dispute

Any dispute between employers and employers, employers and workers, or workers and workers that is about employment, non-employment, terms of employment or conditions of labour. A dispute about an individual worker's discharge, dismissal, retrenchment or termination also counts.

Lay-off

An employer's failure, refusal or inability to give work to a worker on its muster roll who has not been retrenched, because of a shortage of coal, power or raw materials, an accumulation of stock, a machinery breakdown, a natural calamity, or a similar reason.

Lock-out

The temporary closure of a place of work, the suspension of work in it, or an employer's refusal to continue employing any number of its workers.

Retrenchment

Termination of a worker's service by the employer for any reason. It does not include punishment by disciplinary action, voluntary retirement, superannuation, non-renewal or expiry of a fixed term contract, or termination because of continued ill-health.

Settlement

A settlement reached during conciliation, or a written agreement between the employer and workers signed in the prescribed manner. A copy is sent to the officer the government authorises and to the conciliation officer.

Strike

Stopping work by a group of workers acting together, or a joint refusal by a number of workers to continue working or accept work. It includes concerted casual leave on the same day by 50% or more of the workers in an industrial establishment.

Trade Union

Any combination, temporary or permanent, formed mainly to regulate relations between workers and employers, between workers, or between employers, or to impose restrictive conditions on the conduct of any trade or business. It includes a federation of two or more trade unions.

Trade Union Dispute

A dispute between two or more trade unions, or between a trade union and its members.

Wages

All pay expressed in money, including basic pay, dearness allowance and retaining allowance. It does not include:

• bonus that is not part of the terms of employment
• the value of house accommodation, light, water, medical attendance or other amenities
• the employer's contribution to a pension or provident fund
• conveyance allowance, house rent allowance or travel concession
• sums paid to cover special expenses of the job
• overtime allowance, commission, gratuity, retrenchment compensation or ex gratia payments

If the excluded payments add up to more than 50% of total pay, the amount above 50% is counted as wages. Pay in kind, up to 15% of total wages, is also counted as wages.

Worker

Anyone employed in an industry to do manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward. It includes working journalists and sales promotion employees. It excludes:

• apprentices under the Apprentices Act, 1961
• members of the Armed Forces, police and prison staff
• people employed mainly in a managerial or administrative role
• supervisory staff earning more than ₹18,000 a month

For the chapter on trade unions, "worker" means everyone employed in trade or industry, including unorganised workers.