There is major reform in labour law through the Code on Industrial Relation, 2020. Through this it will modernize and consolidate the laws that govern the Industrial Disputes, trade unions, standing orders and workforce restricting. It improves ease of compliance and promote industrial harmony but also give rise to several misconceptions among the HR professionals, industry stakeholders and Employers.

A major source of confusion is the assumption that enactment automatically translates into enforceability. These codes will come under practice after the notification of rules by state and central governments, till then the existing legal framework continues to apply. Through this article will be address the common misconceptions that surrounds the Code on Industrial Relation, 2020 with the actual legal position to help the employers under it better and make a compliant decision.

1. The Code on Industrial Relations status

Misconception:
It is assumed that it is already in force across India.

Reality:
The Code has been enacted but is not yet operational. Its enforcement depends on the notification of rules and the appointment of an effective date by the appropriate government. Till then the existing Industrial Disputes Act, 1947, the trade union Act, 1926 and the Industrial Employment (Standing Orders) Act, 1946 will continue to govern the Industrial Relations.

2. Repeal of Existing Industrial Laws

Misconception:
All the existing Industrial Relations law have been repealed.

Reality:
Existing laws will be repeal once the Code on Industrial Relations, 2020 is formally and fully implemented. Till then the current and existing laws remain legally valid and enforceable, and employers must continue to comply with them.

3. Applicability to All Establishments

Misconception:
This code will applies to every establishments uniformly regardless of size and state.

Reality:
While the code has wide applicability but certain provisions such as those relating to the standing order, retrenchment, layoff and closure, these will applies to only those establishments crossing the mentioned threshold of employees. Its applicability varies depending on the rules notified and specific provisions.

4. Increase in Retrenchment Threshold

Misconception:
Through this code the threshold for retrenchment and Closure has increased to 300 employees by government approval.

Reality:
It is not already approved but it is revised threshold of 300 employees but it will only apply after the code and relevant rules are notified. Till then it will follows the existing threshold of 100 employees under the Industrial Disputes Act, 1947.

5. Absolute Employer Flexibility

Misconception:
Through this code Employers have unrestricted freedom to fire and hire anyone.

Reality:
The Code nonetheless mandates adherence to procedural protections, such as notice periods, compensation for layoffs, and, when necessary, government permission. The goal is to strike a balance between worker protection and operational flexibility.

6. Standing Orders Have Been Abolished

Misconception:
Existing standing orders no longer relevant under the code.

Reality:
Through this code the standing order are still continue to applies but the applicability and threshold will be revised. Covered establishments must still frame and implement certified standing orders or adopt notified model standing orders.

7. Fixed-Term Employment Reduces Employee Rights

Misconception:
Statutory benefits can be denied to the Fixed-term employees.

Reality:
Fixed-term employees are officially recognized under the IR Code, which also guarantees that they get statutory entitlements, benefits, and compensation commensurate with their length of service, just like permanent employees.

8. Trade Unions Lose Recognition

Misconception:
Through this code the trade unions will be remove or weakens.

Reality:
Trade unions are still recognized by the law. In order to guarantee efficient and representative collective bargaining, the Code establishes a systematic process for selecting a negotiating union or council.

9. Multiple Trade Unions Are Not Allowed

Misconception:
In an establishment only one trade union can exist.

Reality:
This code doesn’t prohibit the existence of multiple trade union and any such numbers. It only regulates collective bargaining by recognizing a representative negotiating body based on prescribed membership criteria.

10. Right to Strike Has Been Removed

Misconception:
Right to Strike has been abolished and no longer can be used by for Employees .

Reality:
It has not been abolished but the code has introduced the uniform legal notice requirements for the lockouts and strikes, as through this industrial peace will be maintained and it will provide the predictability for both employers and employees.

11. Increase in Industrial Disputes

Misconception:
Through this code the industrial dispute will increase.

Reality:
Rather than increase in disputes it will help to prevent it through the internal grievance redressal mechanism, streamlined adjudication, reduced prolonged and frequent disputes and conciliation.

12. Complicated Dispute Resolution Framework

Misconception:
It has introduced the more complex dispute resolutions.

Reality:
Rtaher than making it complex it has reduce the burden and complexity by consolidating authorities and introducing time bound procedures and thereby it will reduce the delay and difficulty.

13. Exclusion of Contract and Temporary Workers

Misconception:
It will only applies to permanent employees.

Reality:
The code will applies to not only permanent workers but also to various employees including contract workers, temporary, daily rated and fixed term employees. It will apply depending on the nature of provision involved.

14. Harsh Penal Provisions

Misconception:
Through this code punitive and severe penalties has introduced.

Reality:
The Code adopts a compliance-oriented approach, emphasising monetary penalties, compounding of offences, and reduced reliance on imprisonment, particularly for first-time defaults.

15. Arbitrary Inspections and Enforcement

Misconception:
The Code allows unchecked inspections by authorities.

Reality:
Online and web based inspection will be done that will be n risk based system that is designed to ensure accountability, minimal discretions and transparency.

Conclusion

Modernized industrial relations while maintaining the balance between worker protection and employer flexibility will be obtained through the code on Industrial Relation, 2020. But all the misconception, myths and false information can lead to confusion, disputes and premature or incorrect compliance decisions. All the employers should rely on official notification and enforceable provision and avoid the restricting policies based on informal interpretations.

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FAQ

Q1. When will the Code on Industrial Relations, 2020 become applicable?
A1. Only after the Central and State Governments notify the relevant rules and effective date.

Q2. Are employers required to make immediate changes to HR policies?
A2. No. Changes are required only after the Code is formally implemented.

Q3. Has the retrenchment threshold already increased to 300 workers?
A3. No. The existing threshold of 100 workers continues until notification.

Q4. Are fixed-term employees entitled to statutory benefits?
A4. Yes. Fixed-term employees must receive benefits proportionate to their service, similar to permanent employees.

Q5. Does the Code abolish trade unions?
A5. No. Trade unions continue, with structured recognition for collective bargaining.

Q6. Is the right to strike removed under the Code?
A6. No. The right to strike is regulated through notice requirements.

Q7. Are contract and temporary workers covered?
A7. Yes, depending on the applicable provision of the Code.

Q8. Are penalties more severe?
A8. No. The Code emphasizes compliance and compounding.

Q9. How will inspections be conducted?
A9. Through a transparent, web-based, risk-based inspection system.

1. The Code on Industrial Relations status

Misconception:It is assumed that it is already in force across India.

2. Repeal of Existing Industrial Laws

Misconception:All the existing Industrial Relations law have been repealed.

Reality:Existing laws will be repeal once the Code on Industrial Relations, 2020 is formally and fully implemented. Till then the current and existing laws remain legally valid and enforceable, and employers must continue to comply with them.

3. Applicability to All Establishments

Misconception:This code will applies to every establishments uniformly regardless of size and state.

4. Increase in Retrenchment Threshold

Misconception:Through this code the threshold for retrenchment and Closure has increased to 300 employees by government approval.

Reality:It is not already approved but it is revised threshold of 300 employees but it will only apply after the code and relevant rules are notified. Till then it will follows the existing threshold of 100 employees under the Industrial Disputes Act, 1947.

5. Absolute Employer Flexibility

Misconception:Through this code Employers have unrestricted freedom to fire and hire anyone.

6. Standing Orders Have Been Abolished

Misconception:Existing standing orders no longer relevant under the code.

Reality:Through this code the standing order are still continue to applies but the applicability and threshold will be revised. Covered establishments must still frame and implement certified standing orders or adopt notified model standing orders.

7. Fixed-Term Employment Reduces Employee Rights

Misconception:Statutory benefits can be denied to the Fixed-term employees.

Reality:Fixed-term employees are officially recognized under the IR Code, which also guarantees that they get statutory entitlements, benefits, and compensation commensurate with their length of service, just like permanent employees.

8. Trade Unions Lose Recognition

Misconception:Through this code the trade unions will be remove or weakens.

9. Multiple Trade Unions Are Not Allowed

Misconception:In an establishment only one trade union can exist.

10. Right to Strike Has Been Removed

Misconception:Right to Strike has been abolished and no longer can be used by for Employees .

Reality:It has not been abolished but the code has introduced the uniform legal notice requirements for the lockouts and strikes, as through this industrial peace will be maintained and it will provide the predictability for both employers and employees.

Misconceptions versus Reality under the Code on Industrial Relations, 2020

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