Trade Union: Definition, Registration, and Recognition under the Industrial

Relations Code, 2020

1. Definition of Trade Union
As per Section 2(zh) of the Industrial Relations Code, 2020, a trade union is defined as:
"A trade union means 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 a federation of
two or more trade unions."
2. Registration of Trade Union
Sections 8 to 11 of the Industrial Relations Code, 2020, deal with the registration process for
trade unions.
Provisions:
 Application for Registration (Section 8):
A trade union can apply for registration by submitting the prescribed application form to
the Registrar of Trade Unions. The application must be signed by at least seven members
and should include the following:
o Name and address of the trade union.
o Objectives of the trade union.
o Details of its members and officers.
o A copy of the trade union's constitution and rules.
 Conditions for Registration (Section 9):
The Registrar must ensure the following before granting registration:
o The trade union complies with all the statutory requirements.
o At least 10% of the workers or 100 workers (whichever is less) in the
establishment are members of the union.
 Certificate of Registration (Section 10):
Upon satisfaction, the Registrar issues a certificate of registration, which serves as
conclusive evidence of the union's legal status.
 Cancellation of Registration (Section 11):
The Registrar may cancel the registration if:
o The union ceases to exist.
o It contravenes any provisions of the Code.
 o It fails to comply with conditions of registration.
3. Recognition of Trade Union
Sections 14 to 16 address the recognition of trade unions as negotiating agents.
Provisions:
 Criteria for Recognition (Section 14):
A trade union must represent a majority of workers in an establishment or industry to be
recognized as the sole negotiating union. If no single union has a majority, a negotiating
council comprising multiple unions is formed.
 Negotiating Agent (Section 15):
Recognized trade unions or councils have the exclusive right to negotiate with employers
on employment-related matters, such as wages, working conditions, and benefits.
 Disqualification for Recognition (Section 16):
A trade union may be disqualified from recognition if it:
o Encourages illegal strikes or lockouts.
o Violates provisions of the Code.
o Fails to maintain membership thresholds.
4. Case Laws
1. Bangalore Water Supply and Sewerage Board v. A. Rajappa (1978 AIR 548):
o Defined "industry" broadly, which impacts the scope of trade unions in various
sectors.
o Stressed the importance of trade unions in maintaining industrial harmony.
2. Kameshwar Prasad v. State of Bihar (AIR 1962 SC 1166):
o Recognized the right to form associations, including trade unions, under Article
19(1)(c) of the Indian Constitution.
3. T.K. Rangarajan v. Government of Tamil Nadu (2003) 6 SCC 581:
o Emphasized that trade unions should avoid illegal strikes and ensure responsible
action.
4. All India Bank Employees Association v. N.I. Tribunal (1962 AIR 171):
o Highlighted the role of registered trade unions in representing employees
effectively.
Immunities in Trade Disputes: Criminal and Civil
1. Civil Immunity
Section 20 of the Industrial Relations Code, 2020 provides civil immunity to registered trade
unions.
Provisions:
 Immunity from Tortious Liability:
Members or officials of a registered trade union are immune from liability in civil suits
for acts done in furtherance of a trade dispute, provided the act was lawful. This includes
actions like organizing strikes, demonstrations, and picketing, as long as they adhere to
legal limits.
 Protection for Inducing Breach of Contract:
Registered trade unions or their members cannot be held liable for inducing others to
breach employment contracts, provided such inducement is for furthering a trade dispute.
Important Case Law:
1. Rangpur Tea Association v. Niharilal Chatterjee (AIR 1928 Cal 640):
o Held that inducing workers to leave their employment as part of a trade dispute
does not attract civil liability if done lawfully.
2. Rookes v. Barnard (1964 AC 1129):
o Affirmed the principle that trade unions are immune from liability for acts done in
contemplation of a trade dispute, provided they do not involve threats of violence
or intimidation.

2. Criminal Immunity
Section 21 of the Industrial Relations Code, 2020 grants limited criminal immunity to
registered trade unions.
Key Provisions:
 Immunity for Conspiracy:
Members of a registered trade union are not guilty of criminal conspiracy under Section
120B of the Indian Penal Code (IPC) if the agreement relates solely to furthering a trade
dispute.
 Exceptions:
Immunity does not apply to:
o Acts of violence or coercion.
 o Activities that are otherwise illegal under any law.
Important Case Law:
1. B. R. Singh v. Union of India (1989 AIR 190):
o Clarified that while trade unions have the right to strike, the right does not extend
to illegal or violent acts.
2. Cox v. Coulson (1916 2 KB 177):
o Held that peaceful persuasion or protest in the context of a trade dispute is
protected from criminal liability.
3. All India Bank Employees Association v. N.I. Tribunal (1962 AIR 171):
o Affirmed that trade union actions aimed at lawful protest and negotiations are not
criminal, provided they do not involve intimidation or breach of public order.

3. Limits to Immunities
 Acts of Violence:
No immunity is provided for acts involving violence, coercion, or damage to property.
 Breach of Public Order:
Any activity that disrupts public order or violates fundamental rights of others is outside
the scope of immunity.
 Unregistered Trade Unions:
Only registered trade unions are entitled to these immunities under the Industrial
Relations Code, 2020.

‘Industry’ – Conceptual Analysis under the Industrial Relations Code, 2020

1. Definition of ‘Industry’
Section 2(p) of the Industrial Relations Code, 2020, defines ‘Industry’ as:
"Any systematic activity carried on by co-operation between an employer and workers for
the production, supply, or distribution of goods or services with a view to satisfy human
wants or wishes (not being wants or wishes that are purely spiritual or religious in
nature)."

2. Features of the Definition

 1. Systematic Activity:
The activity must involve organized effort with a clear system or method.
2. Cooperation Between Employer and Workers:
It implies a relationship of mutual dependence between the employer and employees.
3. Purpose:
o Production, supply, or distribution of goods or services.
o Must aim to satisfy human wants, excluding purely spiritual or religious activities.
4. Exclusions:
Certain activities are explicitly excluded, such as:
o Institutions wholly or substantially engaged in charitable, social, or philanthropic
work.
o Domestic services.
o Activities undertaken by individuals employing less than the prescribed number
of workers.

3. Evolution of the Concept of ‘Industry’

The definition of ‘industry’ has been shaped by various judgments over time. Some of the
important cases are:
A. Landmark Cases Preceding the Code
1. Bangalore Water Supply and Sewerage Board v. A. Rajappa (1978 AIR 548):
o Expanded the definition of ‘industry’ significantly.
o Introduced the ‘Triple Test’ to determine whether an activity constitutes an
industry:
 Systematic Activity: Involves organized effort.
 Cooperation Between Employer and Employee: Presence of employer-
employee relationship.
 Production of Goods or Services for Human Wants: Excluding
spiritual/religious activities.
o Held hospitals, educational institutions, and clubs as industries if they satisfy the
triple test.
2. State of Bombay v. Hospital Mazdoor Sabha (1960 AIR 610):
 o Held that hospitals and other welfare organizations are industries as they meet the
essential criteria of systematic activity and cooperation.
3. Safdarjung Hospital v. Kuldip Singh (1970 AIR 1407):
o Initially excluded hospitals from the definition of industry but later overruled by
the Bangalore Water Supply case.
B. Recent Judicial Trends
1. Coir Board, Ernakulam v. Indira Devi P.S. (1998 3 SCC 259):
o Reaffirmed that even small-scale cooperative societies and cottage industries can
fall within the definition of industry.
2. Sundarambal v. Government of Goa (1988 AIR 1700):
o Excluded teachers in educational institutions from the purview of the definition
due to the absence of employer-employee dynamics typically seen in an industry.

4. Impact of the Industrial Relations Code, 2020 on ‘Industry’

 Continuity with Judicial Interpretation:
The definition aligns closely with the broad interpretation provided in Bangalore Water
Supply case while explicitly excluding specific activities.
 Clarity on Exclusions:
Activities purely charitable, philanthropic, domestic services, and those with fewer than
the prescribed number of employees are excluded.
 Streamlining Disputes:
The codification of the term reduces ambiguity, enabling more consistent application
across disputes involving industrial establishments.

Standing Orders under the Industrial Relations Code, 2020

1. Definition of Standing Orders

Standing orders refer to rules that define the conditions of employment in an establishment. They
address matters such as work hours, holidays, termination of employment, disciplinary actions,
and grievance handling procedures.
Section 2(zv) of the Industrial Relations Code, 2020, defines standing orders as:
"Rules of conduct for workmen employed in industrial establishments."
2. Applicability of Standing Orders
Section 28 of the Code provides that:
1. Applicability:
o Industrial establishments with 300 or more workers must prepare and adopt
standing orders.
o Establishments below this threshold may voluntarily adopt standing orders.
2. Flexibility for Employers:
o The threshold has been raised from 100 (under the Industrial Employment
(Standing Orders) Act, 1946) to 300 workers, providing greater flexibility to
smaller employers.
3. Model Standing Orders:
o The government may prescribe Model Standing Orders applicable to
establishments, which will automatically apply if the employer does not draft and
certify their own.

3. Procedure for Certification of Standing Orders

Sections 30 to 32 outline the procedure for certification:
1. Drafting and Submission:
o Employers must submit a draft of the standing orders to the Certifying Officer.
2. Consultation with Workers:
o The Certifying Officer ensures that the workers’ representatives are consulted.
3. Certification:
o The draft is certified if it conforms to the Code and adequately addresses
prescribed matters.
4. Model Standing Orders:
o Until certification, the Model Standing Orders will apply by default.

4. Content of Standing Orders

As per Section 29 and related rules, standing orders must cover:
 1. Classification of workers (e.g., permanent, temporary, apprentices).
2. Manner of notifying hours of work, holidays, and wage rates.
3. Shift working rules.
4. Termination of employment and notice periods.
5. Suspension or dismissal for misconduct.
6. Grievance redressal mechanisms.
7. Any other matters as prescribed.

5. Modifications to Standing Orders

 Standing orders can be modified by mutual agreement between the employer and the
workers or as prescribed under the Code.
 The employer must notify changes to the Certifying Officer.

6. Importance of Standing Orders

 Clarity and Uniformity:
Standing orders ensure clear communication of employment terms and help avoid
disputes.
 Legal Compliance:
They ensure employers adhere to labor laws and protect workers' rights.
 Dispute Resolution:
They serve as a reference point for resolving disputes regarding employment conditions.

7. Case Laws on Standing Orders

1. Rajasthan State Road Transport Corporation v. Krishna Kant (1995 AIR 1715):
o Clarified that disputes arising from standing orders fall within the purview of
labor law mechanisms, ensuring proper redressal of grievances.
2. Associated Cement Companies Ltd. v. P.N. Sharma (1965 AIR 1595):
o Highlighted the binding nature of certified standing orders on both employers and
employees.
3. U.P. State Electricity Board v. Hari Shankar Jain (1978 AIR 65):
 o Affirmed that standing orders form a part of the employment contract and are
enforceable by law.
4. Workmen of Dewan Tea Estate v. Management (AIR 1964 SC 1458):
o Emphasized that standing orders must reflect fairness and protect workers’
interests, ensuring transparency in disciplinary proceedings.
5. Glaxo Laboratories (I) Ltd. v. Presiding Officer, Labour Court (1984 AIR 505):
o Held that model standing orders automatically apply until customized orders are
certified.
8. Recent Developments in the Industrial Relations Code, 2020
 Threshold Increase:
Raising the threshold for mandatory standing orders from 100 to 300 workers has been a
subject of debate. Critics argue it might dilute worker protections in smaller
establishments.
 Simplification:
The integration of standing orders into the Code simplifies compliance for employers
while maintaining core protections for workers.
 Digital Certification:
Provisions for electronic submission and certification of standing orders aim to
streamline the process and reduce delays.

Mechanism for Dispute Resolution under the Industrial Relations Code, 2020
1. Definition of Industrial Dispute
As per Section 2(q) of the Code:
"Industrial dispute" means any dispute or difference between employers and employees, or
between employees and employees, or between employers and employers, connected with
the employment or non-employment, terms of employment, or conditions of labor."

2. Mechanisms for Dispute Resolution

The Code provides a structured framework for resolving disputes, ensuring timely and fair
redressal through various mechanisms.
A. Works Committee (Section 3)
 Applicable to industrial establishments employing 100 or more workers.
 Comprises representatives of both employers and workers.
  Promotes amicable settlement of disputes at the establishment level.
 Focuses on day-to-day issues like working conditions, wages, and grievances.
B. Conciliation (Sections 43-45)
1. Conciliation Officers:
o Appointed by the government to mediate and resolve disputes.
o They act as neutral third parties, facilitating dialogue between the disputing
parties.
2. Conciliation Proceedings:
o Either party to a dispute can refer the matter to a Conciliation Officer.
o The officer attempts to bring about a settlement within a specified time.
o If unresolved, the officer submits a failure report to the appropriate government.
C. Voluntary Arbitration (Section 46)
 Parties to the dispute can voluntarily refer their issues to an arbitrator through a written
agreement.
 The arbitrator’s decision, referred to as the arbitration award, is binding on both parties.
D. Adjudication by Tribunals (Sections 47-51)
1. Industrial Tribunal:
o Deals with disputes referred by the government or unresolved at the conciliation
level.
o Considers cases such as wage revisions, retrenchment, strikes, and lockouts.
2. Composition of Tribunal:
o Comprises one judicial member and one administrative member.
3. Powers of the Tribunal:
o The Tribunal has the authority to summon witnesses, examine evidence, and pass
binding awards.
E. Grievance Redressal Committee (Section 4)
 Every industrial establishment with 20 or more workers must set up a Grievance
Redressal Committee.
 Resolves individual grievances at the establishment level.
  Ensures a speedy resolution of worker grievances related to employment and working
conditions.
F. National Industrial Tribunal (Section 52)
 Constituted by the central government for disputes of national importance or disputes
involving multiple states.
 Similar powers to Industrial Tribunals but operates at a national level.

3. Time Limits for Resolution

The Code introduces specific timelines to expedite dispute resolution:
 Conciliation: Must be completed within 45 days.
 Arbitration Award: Binding from the date of publication by the government.
 Tribunal Decisions: Delivered within a reasonable timeframe, subject to procedural
rules.

4. Restrictions on Strikes and Lockouts (Sections 62-64)

 Strikes and lockouts are prohibited during the pendency of conciliation or adjudication
proceedings.
 Prior notice of 14 days is mandatory before declaring a strike or lockout.

5. Appeals and Judicial Review

 Appellate Authority (Section 53):
Parties aggrieved by the decisions of a Tribunal can appeal to higher authorities, subject
to procedural rules.
 Decisions are subject to judicial review under Article 226 or 227 of the Indian
Constitution.

6. Important Case Laws

A. Landmark Precedents
1. Bangalore Water Supply and Sewerage Board v. A. Rajappa (1978 AIR 548):
o Clarified the scope of "industry," influencing the types of disputes covered under
labor laws.
 2. Workmen of Hindustan Lever Ltd. v. Hindustan Lever Ltd. (1973 AIR 2337):
o Highlighted the importance of conciliation in resolving disputes amicably.
3. Punjab National Bank v. A.I.P.N.B.E. Federation (1959 AIR 45):
o Recognized the role of industrial tribunals in adjudicating disputes related to
wages and conditions of service.
4. Gujarat Steel Tubes Ltd. v. Gujarat Steel Tubes Mazdoor Sabha (1980 AIR 1896):
o Stressed on fair procedures and natural justice in resolving industrial disputes.
B. Recent Case Law
1. ONGC v. Petroleum Coal Labour Union (2015 6 SCC 494):
o Emphasized the importance of grievance redressal mechanisms at the
establishment level.
2. State Bank of India v. Sundara Money (1976 AIR 1111):
o Held that disputes regarding termination of employment must follow due process
and be referred to appropriate authorities.

Concept of ‘Workman’ under the Industrial Relations Code, 2020

1. Definition of ‘Workman’
Section 2(zr) of the Industrial Relations Code, 2020 defines a ‘Workman’ as:
"Any person (including an apprentice) employed in any industry to do any manual,
unskilled, skilled, technical, operational, clerical, or supervisory work for hire or reward,
whether the terms of employment are express or implied."
2. Exclusions from the Definition of Workman
The following categories are excluded from the definition:
1. Persons employed in a managerial or administrative capacity.
2. Persons employed in a supervisory capacity drawing wages exceeding ₹18,000 per
month or as notified by the government.
3. Key Features of the Definition
1. Broad Categories of Work:
o Includes manual, skilled, unskilled, technical, operational, clerical, and
supervisory work.
o Covers both express and implied terms of employment.
 2. Apprentices Included:
o Apprentices under formal agreements are considered workmen.
3. Wage Threshold for Supervisory Roles:
o Supervisory roles earning above the specified wage limit are excluded.
4. Flexibility for Future Adjustments:
o The wage threshold can be revised by the government to adapt to changing
economic conditions.
4. Evolution of the Concept of ‘Workman’
The definition under the Code builds upon the interpretation provided under the Industrial
Disputes Act, 1947, with some modifications to reflect modern employment contexts.
Landmark Cases on the Definition of Workman
1. Bangalore Water Supply and Sewerage Board v. A. Rajappa (1978 AIR 548):
o Clarified that the definition of "workman" includes all persons employed in any
capacity, except those explicitly excluded by law.
2. Burmah Shell Oil Storage and Distribution Co. v. Burmah Shell Management Staff
Association (1970 AIR 245):
o Determined that employees performing supervisory duties are not workmen if
they exercise managerial functions.
3. S.K. Verma v. Mahesh Chandra (1983 AIR 143):
o Held that technical and clerical workers fall under the definition of workman,
provided they do not hold managerial roles.
4. H.R. Adyanthaya v. Sandoz (India) Ltd. (1994 AIR 2608):
o Distinguished between workmen engaged in core operational activities and those
performing managerial or administrative tasks.
5. Devinder Singh v. Municipal Council, Sanaur (2011 6 SCC 584):
o Reiterated that whether an employee qualifies as a workman depends on the
nature of duties performed and not merely the designation.
5. Implications of Being Classified as a Workman
 Eligibility for Protection:
Workmen are entitled to protections under the Code, including dispute resolution
mechanisms, protection against unfair dismissal, and access to collective bargaining.
  Exclusions:
Employees in managerial or administrative roles, or supervisory roles earning above the
wage threshold, are excluded, ensuring the Code focuses on lower and middle-tier
workers.
 Role of Nature of Duties:
The classification as a workman depends on the actual nature of duties rather than job
titles or designations.
6. Disputes Regarding Workman Status
Determination of Workman Status
Disputes often arise regarding whether an individual qualifies as a workman. The following
principles from judicial precedents help in determining status:
1. Nature of Work Performed:
o Clerical, technical, manual, or operational duties qualify as workman activities.
2. Designation vs. Duties:
o Actual duties performed take precedence over the employee's designation.
3. Supervisory and Managerial Roles:
o Employees performing managerial functions or supervising others are excluded,
provided they meet the salary threshold.
7. Key Judicial Principles from Case Law
1. Nature of Duties:
o In J.K. Cotton Spinning and Weaving Mills v. Labour Appellate Tribunal
(1964 AIR 737), it was held that the determining factor is the nature of work
performed, not the designation.
2. Wage Threshold for Supervisors:
o Jaya Bharat Credit and Investment Co. Ltd. v. K. Veeraswamy (1999 4 SCC
21) emphasized that supervisory employees earning above the prescribed
threshold are not classified as workmen.
3. Managerial Capacity:
o In Management of M/s. Heavy Engineering Corporation Ltd. v. Presiding
Officer, Labour Court (AIR 1970 SC 82), it was held that employees exercising
managerial discretion and authority do not qualify as workmen.
4. Functional Test:
 o Ananda Bazar Patrika v. Workmen (1970 3 SCC 248): Introduced the
functional test to determine whether an employee’s primary function is
managerial, administrative, or operational.
8. Recent Developments Under the Industrial Relations Code, 2020
 Inclusion of Apprentices:
Explicitly includes apprentices to expand coverage under the Code.
 Clarity on Supervisory Roles:
Specifies a clear wage threshold for supervisory employees, simplifying disputes
regarding their classification.
 Adaptability:
Allows for future adjustments to the wage threshold, ensuring relevance in changing
economic contexts.

‘Strike’ and ‘Lock-out’ under the Industrial Relations Code, 2020

1. Definition of Strike and Lock-out
Strike
As per Section 2(zk) of the Code:
"Strike" means cessation of work by a body of persons employed in any industry acting in
combination, or a concerted refusal or a 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."
Key elements:
 Cessation of work by employees.
 Conducted collectively or in agreement.
Lock-out
As per Section 2(l) of the Code:
"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."
Key elements:
 Temporary closure or suspension initiated by the employer.
 Aimed at compelling employees to meet specific demands.
2. Legality of Strikes and Lock-outs
Legal Strikes and Lock-outs (Sections 62-64)
Strikes and lock-outs are lawful if they adhere to the following conditions:
1. Notice Requirement:
o A 14-day prior notice must be given to the employer or workers, respectively.
o The strike or lock-out cannot commence before the expiry of the notice period.
2. Prohibition Periods:
Strikes and lock-outs are prohibited:
o During conciliation proceedings and for 7 days after their conclusion.
o During adjudication proceedings and for 60 days after their conclusion.
o When a settlement is in operation, and the terms prohibit such actions.
3. Notice Validity:
o The notice remains valid for 60 days from the date of issuance.
4. Essential Services:
o Strikes in industries classified as public utility services require strict compliance
with the Code.
Illegal Strikes and Lock-outs
A strike or lock-out is illegal if:
 It is conducted without following the notice requirements.
 It occurs during prohibited periods (conciliation/adjudication).
 It violates any specific statutory or contractual provisions.

3. Justification for Strikes and Lock-outs

Justification for Strikes
A strike may be justified if:
 Workers' demands, such as wage increases or better working conditions, are reasonable.
 The employer refuses to negotiate or address grievances.
Case Law:
 1. Kairbetta Estate v. Rajamanickam (1960 AIR 893):
o Held that strikes are justified if they result from the employer’s unfair labor
practices.
2. T.K. Rangarajan v. Government of Tamil Nadu (2003 6 SCC 581):
o The Supreme Court held that while strikes are a legitimate tool of workers, they
must comply with statutory requirements.
Justification for Lock-outs
A lock-out may be justified if:
 Workers resort to unlawful strikes or disrupt industrial harmony.
 The employer takes action to protect business interests or maintain discipline.
Case Law:
1. Management of Kairbetta Estate v. Rajamanickam (1960 AIR 893):
o A lock-out is justified if it is proportional to the workers' actions and is in
response to illegal strikes.
2. Hindustan Lever Ltd. v. Workmen (1973 AIR 1454):
o The Court ruled that lock-outs must be reasonable and proportionate to the
circumstances.

4. Provisions for Dispute Resolution

Conciliation (Sections 43-45):
 Disputes regarding strikes and lock-outs can be referred to a Conciliation Officer for
resolution.
Adjudication (Sections 47-51):
 If conciliation fails, disputes can be referred to an Industrial Tribunal for adjudication.
Role of Tribunals:
 Tribunals assess the legality and justification of strikes and lock-outs based on facts and
law.

5. Penalties for Illegal Strikes and Lock-outs (Section 89-90)

1. For Workers (Illegal Strike):
 o A fine of up to ₹1,000 per worker or imprisonment for up to 1 month, or both.
2. For Employers (Illegal Lock-out):
o A fine of up to ₹50,000 or imprisonment for up to 1 month, or both.

6. Important Case Laws

1. Express Newspapers Ltd. v. Union of India (AIR 1958 SC 578):
o Highlighted the balance between the workers’ right to strike and the employers’
right to manage their business.
2. Rajasthan State Road Transport Corporation v. Krishna Kant (1995 AIR 1715):
o Reiterated that strikes must comply with statutory provisions to be considered
legal.
3. Crompton Greaves Ltd. v. Workmen (1978 3 SCC 83):
o Defined the parameters for justified lock-outs, emphasizing proportionality and
necessity.
4. Bharat Forge Co. Ltd. v. Uttam Manohar Nakate (2005 2 SCC 489):
o Held that workers must resort to legal avenues for grievances before initiating
strikes.

‘Lay-off,’ ‘Retrenchment,’ and ‘Closure’ under the Industrial Relations Code,

2020
1. Lay-off
Definition
As per Section 2(kkk) of the Code:
"Lay-off" means the failure, refusal, or inability of an employer to give employment to a
worker whose name appears on the muster rolls of the establishment and who has not been
retrenched, owing to reasons such as shortage of power, raw materials, breakdown of
machinery, or natural calamity."
Key Features:
1. Applicable to workers on the muster rolls of an establishment.
2. Causes include:
o Shortage of power, raw materials, or cash.
 o Breakdown of machinery.
o Natural calamities like floods or earthquakes.
3. Workers are not retrenched but temporarily denied employment.
Right to Compensation
As per Section 70:
 A laid-off worker is entitled to 50% of the basic wages and dearness allowance for the
period of lay-off.
 Compensation is payable if the worker has completed 240 days of continuous service in
the previous year.
Exceptions
 No compensation is payable if:
o The lay-off is due to a strike or refusal of alternative employment.
o The establishment employs less than 50 workers on an average per working
day in the preceding calendar month.
2. Retrenchment
Definition
As per Section 2(zn) of the Code:
"Retrenchment" means the termination of service of a worker by the employer for any
reason other than disciplinary action, voluntary retirement, retirement on superannuation,
or continued ill-health."
Key Features:
1. Excludes termination due to:
o Disciplinary action.
o Retirement (normal or voluntary).
o Ill-health of the worker.
2. Includes terminations due to downsizing or redundancy.
Conditions for Retrenchment (Section 72):
1. Notice or Payment in Lieu of Notice:
o A one-month notice or payment in lieu of notice is mandatory.
2. Retrenchment Compensation:
 o The worker is entitled to compensation equivalent to 15 days’ average pay for
every completed year of continuous service.
3. Right of Re-employment:
o Retrenched workers are given priority if the employer re-hires for similar roles
within one year.
3. Closure
Definition
As per Section 2(p) of the Code:
"Closure" means the permanent closing down of a place of employment or part thereof."
Conditions for Closure (Section 74):
1. Prior Notice:
o Establishments employing 300 or more workers must provide at least 60 days’
notice to the appropriate government before closure.
2. Government Approval:
o Approval from the appropriate government is mandatory for such establishments.
Compensation to Workers
 Workers affected by closure are entitled to the same compensation as retrenched workers
(i.e., 15 days’ average pay for every year of service).
Exemptions
 Smaller establishments (employing less than 300 workers) are not required to seek prior
government approval for closure.
4. Important Case Laws
1. Hariprasad Shivshanker Shukla v. A.D. Divikar (1957 AIR 121):
o The Supreme Court held that retrenchment applies only to terminations that meet
the statutory definition under the Act.
2. Workmen of Subong Tea Estate v. Outgoing Management (1964 AIR 1368):
o Clarified that retrenchment compensation must be paid even in cases of closure.
3. Excel Wear v. Union of India (1979 AIR 25):
o The Supreme Court ruled that the right to close a business is fundamental under
Article 19(1)(g) of the Constitution, but it can be regulated reasonably in the
interest of workers.
 4. Sundaram Motors (P) Ltd. v. Ameerjan (1985 1 LLJ 272 SC):
o Highlighted the employer’s obligation to follow the retrenchment process even in
cases of downsizing.
5. Punjab Land Development and Reclamation Corporation v. Presiding Officer (1990
AIR 229):
o Reiterated the need for notice and compensation to workers in case of
retrenchment.
6. Biharilal Motilal v. Labour Court, Hyderabad (1995 AIR 200):
o Emphasized that closure without following statutory provisions renders the act
illegal, entitling workers to full compensation.
5. Dispute Resolution and Penalties
Dispute Resolution
1. Conciliation (Section 43):
o Disputes arising from lay-offs, retrenchment, or closure can be referred to a
Conciliation Officer.
2. Adjudication (Section 47):
o Unresolved disputes can be referred to the Industrial Tribunal.
Penalties
 Non-compliance with provisions related to lay-off, retrenchment, or closure attracts fines
or imprisonment under the Code.

6. Modern Reforms in the Code

 Threshold Increase for Prior Approval:
o The Code raises the threshold for government approval for retrenchment and
closure from 100 workers (under previous laws) to 300 workers, offering greater
flexibility to employers.
 Digital Compliance:
o Employers can submit lay-off and retrenchment notices digitally, simplifying
compliance.
Unfair Labour Practices under the Industrial Relations Code, 2020
1. Definition of Unfair Labour Practices
As per Schedule II of the Industrial Relations Code, 2020:
Unfair Labour Practices refer to actions by employers, workers, or trade unions that violate the
principles of fairness and justice in employment and industrial relations.
The Code outlines specific acts by employers, workers, and trade unions that constitute ULPs.
2. Unfair Labour Practices by Employers
The following actions by employers are categorized as ULPs:
1. Interference with Trade Union Activities:
o Coercing workers to join or refrain from joining a trade union.
o Promoting a specific trade union or providing financial support to one.
2. Discrimination Against Workers:
o Termination or demotion due to trade union membership or activities.
o Discrimination in hiring, training, or promotions based on union affiliation.
3. Victimization of Workers:
o Retaliating against workers for filing complaints or participating in legal
proceedings.
4. Non-compliance with Legal Obligations:
o Failing to implement settlements, awards, or agreements.
5. Exploitation and Unfair Treatment:
o Paying wages below the statutory minimum.
o Forcing workers to resign under duress.
3. Unfair Labour Practices by Workers or Trade Unions
Workers or trade unions are considered to engage in ULPs if they:
1. Coerce Non-members:
o Force other workers to join a specific trade union or participate in strikes.
2. Obstruct Business Operations:
o Intimidate management or obstruct legitimate business operations.
3. Engage in Illegal Strikes:
 o Participate in strikes without adhering to legal provisions.
4. Promote Violence:
o Incite violence during strikes or protests.
5. Violate Settlement Terms:
o Fail to honor the terms of agreements or awards.
4. Remedies Against Unfair Labour Practices
Complaint Mechanisms
1. Adjudication (Section 50):
o Disputes related to ULPs can be referred to the Industrial Tribunal.
2. Conciliation (Section 43):
o A Conciliation Officer can mediate and resolve disputes arising from ULPs.
Prosecution and Penalties (Section 89)
 Employers or workers found guilty of ULPs face penalties, which may include:
o Fines.
o Imprisonment for severe or repeated violations.
5. Important Case Laws
1. Hindustan Lever Ltd. v. Ashok Vishnu Kate (1995 AIR 360):
o The Supreme Court emphasized that victimization of workers for trade union
activities constitutes an unfair labor practice.
2. Glaxo Laboratories v. Presiding Officer, Labour Court (1984 AIR 505):
o Held that coercing workers to withdraw from trade unions or influencing their
union affiliation is prohibited.
3. Punjab National Bank v. All India Punjab National Bank Employees' Federation
(1960 AIR 160):
o Reiterated that failure to implement agreements or awards is an unfair labor
practice.
4. Bharat Bank Ltd. v. Employees (1950 AIR 188):
o Established that intimidation of workers to prevent them from joining trade
unions amounts to ULP.
5. ITC Ltd. v. State of Karnataka (2002 SCC 742):
 o The Court ruled that strikes without notice and obstructing business operations are
unfair practices by trade unions.
6. Dalmia Cement (Bharat) Ltd. v. Workmen (1977 AIR 2300):
o The Court emphasized that non-compliance with settlement terms is an unfair
practice under labor laws.

Minimum Wages and Payment of Wages under the Code on Wages, 2019
The Code on Wages, 2019 (commonly referred to as the Wages Code) consolidates four major
labor laws:
1. The Minimum Wages Act, 1948.
2. The Payment of Wages Act, 1936.
3. The Equal Remuneration Act, 1976.
4. The Payment of Bonus Act, 1965.
The Code simplifies wage regulations, covering aspects such as minimum wages and payment
of wages while expanding the applicability to all employees across industries.

1. Minimum Wages
Definition (Section 2(h))
"Minimum wage" refers to the wage fixed by the appropriate government that an
employer is legally required to pay workers, ensuring basic livelihood and social protection.

Provisions for Minimum Wages (Chapter II, Sections 5–9)

1. Applicability (Section 5):
o Minimum wages are applicable to all workers in scheduled employments,
regardless of their skill level (skilled, unskilled, or semi-skilled).
2. Fixation of Minimum Wages (Section 6):
o Minimum wages are fixed by the appropriate government (Central or State)
based on factors such as:
 Skill of workers.
 Nature of work.
 Local living conditions and cost of living.
 3. Components of Minimum Wages (Section 6):
o Basic wages.
o Allowances for housing, cost of living, and travel.
4. National Floor Wage (Section 9):
o The Central Government may set a National Floor Wage.
o States cannot fix minimum wages lower than the national floor.
5. Revision of Minimum Wages (Section 8):
o Minimum wages must be revised at least every five years or earlier if required.
6. Overtime Payment (Section 14):
o Wages for overtime work must be at twice the normal rate.

Important Case Laws on Minimum Wages

1. Crown Aluminium Works v. Their Workmen (1958 AIR 30):
o The Supreme Court defined minimum wages as those necessary to meet the basic
needs of workers and their families, including food, clothing, housing, and
education.
2. Sanjit Roy v. State of Rajasthan (1983 AIR 328):
o It was held that payment below the minimum wage violates Article 23 of the
Constitution (prohibition of forced labor).
3. Peoples’ Union for Democratic Rights v. Union of India (1982 AIR 1473):
o Non-payment of minimum wages was deemed a form of forced labor under
Article 23.
4. Airfreight Ltd. v. State of Karnataka (1999 1 LLJ 705 SC):
o The Court emphasized that minimum wages are a statutory right and cannot be
waived.

2. Payment of Wages
Definition (Section 2(y))
"Wages" include all monetary remuneration expressed in terms of money, excluding
allowances for housing, travel, pension, gratuity, and bonus.
Provisions for Payment of Wages (Chapter III, Sections 15–23)
1. Applicability (Section 15):
o Payment of wages applies to all employees regardless of wage ceilings or
employment type.
2. Timely Payment (Section 17):
o Wages must be paid:
 Daily wage workers: At the end of the day.
 Weekly workers: By the end of the week.
 Monthly workers: By the 7th day of the next month.
3. Mode of Payment (Section 15):
o Payment must be made in currency notes, coins, or digitally (e.g., bank
transfers).
4. Deductions from Wages (Section 18):
o Permissible deductions include:
 Taxes, loans, or advances.
 Absence from duty or damages caused by negligence.
o Deductions cannot exceed 50% of total wages.
5. Penalties for Delayed Payment (Section 21):
o Workers are entitled to compensation in case of delayed or non-payment.
6. Wage Slips (Section 19):
o Employers must provide detailed wage slips to employees, ensuring transparency.

Important Case Laws on Payment of Wages

1. Manganese Ore (India) Ltd. v. Chandi Lal Saha (1991 AIR 520):
o The Court ruled that deductions from wages must strictly comply with statutory
provisions.
2. Bhartiya Kamgar Sena v. Bombay Dyeing and Manufacturing Co. Ltd. (1996 AIR
1873):
 o Established that workers have the right to claim wages within the prescribed
timeline.
3. Glaxo Laboratories v. Labour Court (1984 AIR 505):
o Non-payment or delayed payment of wages was held to be unfair labor practice.
4. Union of India v. K.S. Subramanian (1976 AIR 2433):
o The Supreme Court clarified that the government and employers must ensure
timely payment of wages to all categories of employees.

3. Compliance and Penalties

1. Inspection Mechanism (Section 51):
o Inspectors-cum-Facilitators ensure compliance with minimum wages and
payment of wages.
2. Penalties (Sections 53–55):
o For Non-payment of Wages: Fine up to ₹50,000.
o For Repeat Offenses: Fine up to ₹1,00,000 and/or imprisonment up to 3 months.

4. Modern Reforms in the Wages Code

1. Uniform Applicability:
o The Code applies to all sectors and categories of workers, unlike earlier laws that
covered only specific industries or wage thresholds.
2. Digital Payments:
o Encourages electronic wage payments, improving transparency and ease of
compliance.
3. National Floor Wage:
o Prevents disparities in wage rates across states.

Payment of Bonus under the Code on Wages, 2019

1. Definition of Bonus
As per Section 2(20) of the Code on Wages, 2019:
"Bonus" means any sum of money payable to an employee in lieu of profit sharing or
productivity, under a statutory obligation or otherwise.

2. Applicability of Payment of Bonus

1. Coverage (Section 26):
o Applies to every factory and other establishments employing 20 or more
employees.
o However, the appropriate government may apply it to establishments employing
10 or more employees.
2. Eligibility for Bonus (Section 26):
o Employees earning a wage of up to ₹21,000 per month (or as notified by the
government) are eligible for a bonus.
3. Disqualification (Section 29):
An employee is disqualified from receiving a bonus if they are:
o Dismissed due to fraud, violent behavior, theft, or misconduct.

3. Types of Bonus
1. Statutory Bonus (Section 26):
o A minimum bonus of 8.33% of wages or ₹100, whichever is higher, is mandatory
for eligible employees, irrespective of profit.
2. Additional Bonus (Section 26):
o If the employer makes a profit, a maximum bonus of 20% of wages can be
distributed.
3. Set-on and Set-off (Section 26):
o Surplus profits in a year can be set-on to meet future bonus obligations.
o In years of losses, a set-off mechanism applies.

4. Calculation of Bonus (Sections 27–28)

1. Wage Ceiling for Bonus Calculation:
o If wages exceed ₹7,000 per month (or the minimum wage for the scheduled
employment, whichever is higher), bonus calculations are capped at that level.
 2. Formula for Bonus Calculation:
Bonus = (Total allocable surplus × Wages of employee) / Total wages of all
employees.
3. Allocable Surplus:
o It refers to profits available for bonus distribution after deducting prior liabilities
and reserves as prescribed.

5. Time for Payment of Bonus (Section 30)

 Bonus must be paid within 8 months of the close of the accounting year.
 If delayed, employees are entitled to interest as determined by the appropriate
government.

6. Recovery of Bonus (Section 33)

If an employer fails to pay the bonus:
 The employee can file a claim with the Tribunal within one year from the date the
bonus becomes due.

7. Important Case Laws

1. Project Manager, Ahmedabad Project v. Their Workmen (AIR 1981 SC 801):
o Held that a minimum bonus is a statutory right of workers, irrespective of the
financial condition of the employer.
2. State of Punjab v. Labour Court, Jullundur (1979 AIR 1981):
o Established that the bonus must be calculated based on allocable surplus and
cannot arbitrarily exceed statutory limits.
3. Union of India v. Metal Box Co. (AIR 1969 SC 612):
o Defined allocable surplus and clarified the principles for its calculation under the
Payment of Bonus Act.
4. Bajaj Auto Ltd. v. Deputy Commissioner of Labour (2017 AIR 1896):
o The Court emphasized the timely payment of bonuses as a legal obligation.
5. J.K. Synthetics Ltd. v. Union of India (AIR 1972 SC 132):
o Highlighted that employees cannot waive their right to a statutory bonus.
8. Reforms Introduced in the Wages Code
1. Uniform Applicability:
o Bonus provisions now cover a broader spectrum of industries and establishments.
2. Digital and Transparent Payments:
o Mandates the electronic transfer of bonuses for better compliance and
transparency.
3. National Minimum Wages Impact:
o The link between bonuses and minimum wages ensures employees receive fair
benefits.

9. Penalties for Non-Compliance (Section 56)

 Employers failing to pay the bonus face a fine of up to ₹50,000

Offences and Penalties under the Code on Wages, 2019

1. Key Offences and Corresponding Penalties
1.1 Non-payment or Delayed Payment of Wages (Section 45)
 Offense: Failure to pay wages within the stipulated time or unauthorized deductions.
 Penalty:
o First offense: Fine up to ₹50,000.
o Repeat offense within five years: Fine up to ₹1,00,000 or imprisonment up to 3
months, or both.
1.2 Non-payment of Minimum Wages (Section 45)
 Offense: Payment of wages below the statutory minimum wage or non-compliance with
National Floor Wage provisions.
 Penalty:
o Fine up to ₹50,000.

1.3 Non-payment of Bonus (Section 45)

  Offense: Failure to pay the statutory bonus or delay in payment beyond the prescribed
time.
 Penalty:
o Fine up to ₹50,000 for the first offense.
o Repeat offense: Fine up to ₹1,00,000 or imprisonment up to 3 months, or both.

1.4 Obstruction of an Inspector-cum-Facilitator (Section 53)

 Offense: Hindering an Inspector-cum-Facilitator in the performance of their duties, such
as inspection or inquiry.
 Penalty:
o Fine up to ₹20,000.

1.5 Furnishing False Information (Section 53)

 Offense: Providing false or misleading information during inspections or inquiries.
 Penalty:
o Fine up to ₹50,000.

1.6 Non-maintenance of Records (Section 50)

 Offense: Failure to maintain required registers, wage slips, or other prescribed
documents.
 Penalty:
o Fine up to ₹10,000.

2. Compounding of Offenses (Section 56)

 Certain offenses under the Code are compoundable on payment of up to 50% of the
maximum fine prescribed.
 Compounding provides an alternative to litigation, encouraging voluntary compliance.

3. Inspection and Compliance Mechanism

1. Inspector-cum-Facilitators (Section 51):
 o Authorized to conduct inspections, verify records, and ensure compliance.
o They can issue compliance notices for minor violations instead of directly
imposing penalties.
2. Compliance Notice:
o For minor violations, employers are given an opportunity to rectify the issue
within a specified time without prosecution.

4. Judicial Interpretations and Important Case Laws

4.1 Crown Aluminium Works v. Their Workmen (1958 AIR 30)
 Highlighted that non-payment of minimum wages violates statutory obligations and
attracts penalties.
4.2 Peoples’ Union for Democratic Rights v. Union of India (1982 AIR 1473)
 The Supreme Court ruled that payment below minimum wages constitutes forced labor
under Article 23 of the Constitution.
4.3 Hindustan Steel Ltd. v. State of Orissa (1970 AIR 253)
 Established that penalties should not be imposed if the violation occurred due to a bona
fide misunderstanding of the law.
4.4 Sanjit Roy v. State of Rajasthan (1983 AIR 328)
 Affirmed that non-compliance with minimum wage laws is unconstitutional, as it
deprives workers of their rights.
4.5 Bhilwara Dugdh Utpadak Sahakari Sangh Ltd. v. Union of India (2020):
 Highlighted that delays in wage payment attract statutory penalties and compensation for
affected workers.

5. Modern Reforms and Digitalization

 Digital Compliance:
o Employers are encouraged to maintain records digitally, improving transparency
and reducing errors.
 Simplified Provisions:
o The Code eliminates ambiguity by consolidating offenses and penalties, making
compliance easier.
  Focus on Rectification:
o The emphasis on compliance notices for minor violations minimizes unnecessary
litigation while promoting corrective action.

Miscellaneous Provisions under the Code on Wages, 2019

Miscellaneous Provisions
1. Delegation of Powers (Section 54)
 The appropriate government (Central or State) can delegate powers to officers or
authorities, except the power to make rules under the Code.
 Helps streamline the implementation and enforcement processes.

2. Protection of Actions Taken in Good Faith (Section 55)

 No suit, prosecution, or legal proceeding shall lie against any officer or authority for
actions taken in good faith under the Code.
 Ensures that enforcement officers can perform their duties without fear of unwarranted
litigation.

3. Bar on Civil Courts (Section 57)

 Civil courts are barred from entertaining any suits or proceedings related to matters under
the Code.
 Disputes or grievances must be addressed through the mechanisms provided in the Code,
such as tribunals or appellate authorities.

4. Power to Make Rules (Section 67)

 The Central Government and State Governments have the power to make rules for the
effective implementation of the Code.
 Covers aspects like wage periods, deductions, bonus calculations, and maintenance of
records.

5. Transitional Provisions (Section 68)

  Any action taken, rules made, or proceedings initiated under the repealed laws (e.g.,
Payment of Wages Act, Minimum Wages Act) are deemed to continue as if they were
done under the Code.
 Provides clarity and continuity during the transition from old laws to the consolidated
Code.

6. Repeal and Savings (Section 69)

 The Code repeals the following four laws:
o Payment of Wages Act, 1936.
o Minimum Wages Act, 1948.
o Payment of Bonus Act, 1965.
o Equal Remuneration Act, 1976.
 Any rights, liabilities, or penalties incurred under the repealed laws are preserved unless
explicitly inconsistent with the Code.

7. Burden of Proof in Disputes (Section 58)

 In cases of disputes regarding wages, bonus, or deductions, the burden of proof lies on
the employer to prove compliance with the provisions of the Code.
 Strengthens workers' position in disputes.

8. Empowerment of Tribunals (Section 59)

 Industrial Tribunals are empowered to handle disputes arising under the Code.
 This ensures that disputes are resolved by specialized forums, leading to quicker and
fairer adjudication.

9. Display of Notices (Section 23)

 Employers are required to display notices regarding wages, payment dates, and other
prescribed details at workplaces.
 Enhances transparency and awareness among employees.

10. Payment to Nominee or Legal Heirs (Section 48)

  In case of the death of an employee, unpaid wages or bonus must be paid to the nominee
or legal heir.
 Ensures that the family of the deceased employee receives their rightful dues promptly.

11. Recovery of Excess Payment (Section 49)

 If an employee is overpaid, the employer is allowed to recover the excess amount after
providing due notice.
 Ensures that mistakes in wage payments are rectified transparently.

Features Enhancing Worker Protections

1. Non-Discrimination (Section 3):
o Prohibits discrimination in wage payment based on gender for the same or similar
work.
2. Digitization:
o Encourages electronic payment of wages, improving transparency and reducing
errors.
3. Accountability:
o Employers must maintain detailed records of wage payments, deductions, and
bonuses.

Judicial Interpretations Related to Miscellaneous Provisions

1. Bihar State Electricity Board v. Suresh Prasad (2004 AIR SC 1923):
o Affirmed the principle that tribunals are the appropriate forums for wage-related
disputes, emphasizing the importance of specialized dispute resolution
mechanisms.
2. Glaxo Laboratories Ltd. v. Labour Court, Meerut (1984 AIR SC 505):
o The Court emphasized the role of tribunals in ensuring timely resolution of
disputes under wage laws.
3. Delhi Transport Corporation v. DTC Mazdoor Congress (1991 AIR SC 101):
o The Supreme Court held that transparency and adherence to statutory obligations
are crucial in labor relations, reinforcing provisions such as notice display and
record maintenance.