Industrial Relations and the IR Code: Revision Notes

Industrial relations is the system of relationships between employers, workers and unions, and the State, through which employment terms are set and conflict is resolved. IR is collective (unions, bargaining, disputes); employee relations is broader and includes individual and non-union matters. The unitary view sees conflict as abnormal; the pluralist view, the basis of Indian law, treats conflict between legitimate interests as normal and manages it through institutions; the radical view sees a capital–labour divide. Dunlop (1958): actors, context and ideology produce a web of rules.

Fundamental Rights: Article 19(1)(c) guarantees the right to form unions, but the Supreme Court has held there is no fundamental right to strike; Article 21 covers livelihood and dignity; Articles 23 and 24 prohibit forced labour and child labour in hazardous work. Directive Principles: equal pay (39), humane conditions and maternity relief (42), living wage (43) and workers’ participation in management (43A). Labour is in the Concurrent List, so states frame rules under the Codes. India has not ratified ILO Conventions 87 and 98 on freedom of association and collective bargaining.

The IR Code merged the Trade Unions Act 1926, Standing Orders Act 1946 and Industrial Disputes Act 1947. “Industry” follows Rajappa (1978): systematic activity, employer–employee cooperation, production or distribution of goods or services; profit is irrelevant; the dominant-nature test applies to mixed activities. The Code excludes charitable, social or philanthropic institutions, sovereign functions and domestic service (the compendium’s statement that charities can be industries is outdated). A worker excludes managerial and administrative staff and supervisors earning above ₹18,000 a month (previously ₹10,000), and includes working journalists and sales promotion employees. An individual dispute over discharge, dismissal, retrenchment or termination is an industrial dispute.

India’s first organised union was the Madras Labour Union (1918); AITUC was founded in 1920. Federations are politically linked: BMS (largest), INTUC, CITU, AITUC, HMS. Registration needs 10% of workers or 100, whichever is less (minimum 7); at least half of office-bearers must be actual workers. Registered unions have immunity from conspiracy charges and civil suits for lawful trade-dispute activity. The Code’s recognition rule: a union with 51% membership is the sole negotiating union; otherwise a negotiating council of unions with at least 20% each. Unfair labour practices are listed for both sides (victimisation, company unions, refusing to bargain; coercion, go-slow, gherao, violence).

Collective bargaining runs from charter of demands through preparation, negotiation and settlement to administration. Distributive bargaining divides a fixed amount; integrative bargaining trades, for example wages for multi-skilling. A bipartite settlement binds the parties; a settlement in conciliation binds all workers. Settlements usually last three to four years and are increasingly productivity-linked.

Standing orders set workers’ conditions of employment: classification, hours, leave, misconduct, discipline, termination and grievances. They apply at 300+ workers (previously 100); the Model Standing Orders, 2026 cover mines (A), manufacturing (B) and services (C).

Domestic enquiry: complaint, preliminary inquiry, optional suspension with subsistence allowance of 50% for 90 days and 75% after, specific charge-sheet, enquiry by an impartial officer with a presenting officer and defence representative, cross-examination and disclosure of documents, reasoned findings, second show-cause with proposed punishment, then a proportionate order. Natural justice: audi alteram partem and nemo judex in causa sua. Defective enquiries are the main reason dismissals are overturned. McGregor’s hot-stove rule: immediate, warned, consistent, impersonal.

The Grievance Redressal Committee is required at 20+ workers (up to 10 members, equal representation, women in proportion to the workforce) and generally resolves grievances within 30 days. The Works Committee is required at 100+ workers (up to 20 members) for day-to-day cooperation. Unresolved disputes go to a conciliation officer, then to voluntary arbitration or a two-member Industrial Tribunal (judicial and administrative members), and to the National Industrial Tribunal for national or multi-state disputes. Labour Courts and Boards of Conciliation were abolished. Individual workers can approach the Tribunal directly after the conciliation period.

A strike is concerted cessation or refusal of work, including mass casual leave by 50% or more of workers on a day; a lockout is the employer’s equivalent pressure. In all industrial establishments (previously mainly public utilities), notice must be given within 60 days before the action, which cannot start within 14 days of notice, during conciliation and 7 days after, during tribunal or arbitration proceedings and 60 days after, or on matters covered by an operative settlement. An illegal strike means no wages and possible penalties and discipline. Go-slow is misconduct; gherao is unlawful.

Lay-off is temporary inability to give work; compensation is 50% of basic + DA. Retrenchment is termination other than as punishment and excludes voluntary retirement, superannuation, non-renewal of fixed-term contracts and continued ill-health; it needs one month’s notice, 15 days’ average pay per completed year and last-in-first-out. Closure needs 60 days’ notice to government for 50+ workers. At 300+ workers, all three need prior government permission (retrenchment with three months’ notice; closure applied for 90 days ahead). The reskilling fund adds 15 days’ last wages, paid by the employer within 10 days and credited to the worker within 45 days. Retrenched workers have re-employment preference for one year. VRS exits are not retrenchment.

Fixed-term employment is direct employment for a fixed period with pay and benefits no less favourable than permanent workers and gratuity after one year; non-renewal is not retrenchment; repeated renewals for perennial work carry risk. Workers’ participation (Article 43A) takes the form of works committees, joint councils, safety and canteen committees and some worker directors in PSUs.

Case lessons: Maruti Manesar (2012), contract-worker pay gaps and blocked union registration led to fatal violence; Honda (2005), union formation clashes; Wistron (2020), contractors’ unpaid wages led to riots and principal-employer accountability; Samsung Sriperumbudur (2024), a month-long strike over wages and recognition; Tata Steel, joint consultation enabling large voluntary workforce reductions. Early warning signs: rising grievances, absenteeism, overtime refusal, go-slow, rival unions and contract workers’ complaints.