For organisations evaluating how to comply with the Industrial Relations Code, 2020, it is important to understand that the legislation establishes a structured compliance framework governing collective bargaining, dispute resolution, and workforce restructuring decisions.
From an employer perspective, the Industrial Relations Code, 2020 (“IR Code”) requires organisations to review how disputes at workplace are handled, how grievances raised by the employees are addressed, and how workforce restructuring decisions are made. Compliance under this framework is not limited to only legal documentation, but also requires employers to adopt structured internal processes for communication, negotiation, and dispute resolution.
The following discussion outlines key compliance action points for employers under the IR Code.
1. Establish internal bipartite forums for workplace dialogue
One of the important features of the IR Code is the emphasis placed on internal dialogue between employers and employees.
The legislation pursuant to Section 3 requires establishments in which one hundred or more workers have been employed on any day in the preceding twelve months to constitute Works Committees comprising equal representatives of both employers and workers. These committees are intended to promote cooperation between management and employees and to address matters affecting workplace conditions and day to day functioning of the establishment.
In addition, establishments employing twenty or more of workers must also establish Grievance Redressal Committees.
The purpose of these committees is to provide employees with a structured mechanism through which individual workplace grievances can be raised and resolved internally before escalating into formal industrial disputes.
Establishing such internal committees forms part of IR code compliance requirements, which helps in strengthening the prevention of workplace disputes and a mechanism to resolve such disputes.
From a compliance perspective, employers should ensure that:
- proper constitution of committees;
- fair selection of employee representatives;
- meetings are held on a regular basis; and
- maintenance of records of discussion and decisions.
A properly functioning grievance redressal structure can significantly reduce the risk of industrial disputes reaching external authorities.
2. Understand trade union recognition and collective bargaining frameworks
The IR Code lays down a more defined framework for the recognition of negotiating unions.
Where an establishment has multiple trade unions, Section 14 provides a mechanism for identifying a single negotiating representative for collective bargaining purposes.
Employers should therefore familiarise themselves with trade union recognition rules under IR Code 2020 to ensure that collective bargaining processes follow the statutory framework.
As per Section 14, when the negotiating union or council is recognised it becomes the principal body with which the employer engages in discussions regarding employment conditions, workplace policies, and collective agreements.
Employers should therefore understand the legal framework governing trade union registration, recognition, and participation in negotiations.
For organisations operating in unionised sectors, engagement with the employee representatives must align with the procedural safeguards provided under the IR Code.
Additionally, employers should keep in mind that failure to recognise legitimate negotiating structures may expose them to allegations of unfair labour practices.
3. Prepare and certify standing orders governing service conditions
Another important component of the IR Code relates to standing orders, which define the terms and conditions of employment applicable to workers in industrial establishments.
First Schedule of the IR Code provides for matters that are required to be covered in the standing order. These include, but are not limited to, the following:
- classification of workers
- attendance and late coming
- shift systems
- termination procedures
- leave policies
disciplinary rules and misconduct definitions
Employers in covered establishments, that is, every industrial establishment wherein three hundred or more workers are employed or were employed on any day of the preceding twelve months, must prepare draft standing orders and submit them to the appropriate authority for certification. Once certified, the standing orders become binding on both the employer and employees.
Compliance with standing orders under IR Code is therefore an important legal requirement for employers operating industrial establishments.
Employers should therefore ensure that standing orders are carefully drafted and aligned with organisational policies and operational realities.
It is required under Section 30 that employers inform the employees about the contents of standing orders and that copies are made accessible by displaying them prominently in the workplace.
4. Provide notice before making significant changes in employment conditions
The IR Code also lays down a structured process for how employers may introduce material changes to employment conditions.
Under Section 40, where an employer proposes changes in matters specified in the Third Schedule, such as wages or shift arrangements, the employer must issue a formal notice of change to employees before implementing such changes.
These procedural requirements form part of the broader framework regulating employer obligations under IR Code provisions governing employment conditions.
This requirement ensures that workers are given prior visibility of proposed changes and an opportunity to raise concerns or objections through appropriate channels before changes are implemented.
Employers should therefore carefully review whether proposed modifications to wages, working hours, shift patterns, or other service conditions fall within the scope of the Third Schedule and require advance notice under the Code.
Maintaining transparency in this process can help in reducing the likelihood of industrial disputes and maintaining stable industrial relations.
5. Use structured dispute resolution mechanisms
The IR Code provides a multi-layered mechanism for resolving industrial disputes.
The dispute resolution system typically involves stages such as:
- conciliation proceedings
- voluntary arbitration
- adjudication before Industrial Tribunals or National Industrial Tribunals
Conciliation officers appointed under the IR Code are responsible for facilitating negotiations between employers and employees in order to resolve disputes amicably without the need for formal proceedings.
Employers should be familiar with these procedures and approach conciliation when managing workplace conflicts and avoid prolonged litigation and disruption.
Employers should approach conciliation proceedings with a constructive mindset. Early resolution of disputes at the conciliation stage often prevents prolonged litigation and disruption of operations.
Organisations should also ensure that representatives appearing in such proceedings are properly authorized and adequately briefed, as statements made during conciliation can have downstream implications if the matter proceeds further.
6. Understand legal restrictions on strikes and lockouts
The IR Code also introduces clear limits on strikes and lockouts in industrial establishments.
As per Sections 62 to 64, workers and employers require certain procedural conditions that must be satisfied before workers can lawfully commence a strike or before employers can initiate a lockout.
In particular, strikes and lockouts may be prohibited during certain stages of dispute resolution proceedings or within specified time periods following settlements or adjudication.
For employers, this means that any decision involving workforce disruptions must be governed by a legal framework that must be carefully navigated. It is essential for organisations to maintain accurate records of dispute proceedings and settlement timelines.
Where there is a risk of industrial unrest, employers should seek legal guidance before taking decisions relating to lockouts or disciplinary actions to ensure that action remains legally sustainable.
7. Follow statutory procedures for layoffs, retrenchments, and closures
Decisions around workforce restructuring are among the most sensitive areas and closely governed by the IR Code.
The IR Code prescribes conditions that employers must satisfy before implementing layoffs, retrenchments, or closure of industrial establishments. These requirements are primarily set out in section 67 to 75. With additional obligations for larger establishments covered under section 77-82.
Before taking any step regarding workforce restructuring, the employers should therefore carefully review layoff and retrenchment rules under IR Code.
These provisions generally require employers to:
- provide prior notice to affected workers;
- paying statutory compensation;
- follow principles such as “last in, first out” under section 71; and
- obtain prior permission from authorities in specified cases.
In practice, this means that the employers should therefore ensure that any workforce reduction exercise is carefully planned and legally reviewed before implementation.
Non-compliance with these requirements can render retrenchment or closure decisions invalid and may expose employers to legal disputes or regulatory consequences.
8. Contribute to the Worker Re-skilling Fund where applicable
The IR Code also introduces a Worker Re-skilling Fund under Section 83, aimed to support workers who lose employment due to retrenchment.
Employers are required to contribute to this fund in accordance with the provisions of the IR Code.
This provision reflects the broader policy objective of assisting workers in acquiring new skills and transitioning to alternative employment opportunities following job loss.
From a compliance perspective, employers should factor these statutory obligations into workforce restructuring planning to ensure that the process is legally sound and operationally manageable.
9. Avoid unfair labour practices
The IR Code explicitly prohibits unfair labour practices on the part of both employers and workers. These are set out in Section 84, read with the Second Schedule.
Examples of unfair labour practices by employers may include interference with trade union activities, discrimination against union members, or refusal to bargain collectively in good faith.
From a compliance perspective, avoiding unfair labour practices forms an important part of labour law compliance for employers in India under the IR Code.
Employers should ensure that internal policies, disciplinary actions and managerial decisions are consistent with the legal principles governing fair industrial relations as per the IR Code.
Training managerial personnel on labour law compliance and dispute prevention can go a long way in reducing the likelihood of disputes and allegations relating to unfair labour practices.
10. Maintain records and prepare for regulatory scrutiny
Like other labour codes, the IR Code also requires employers to maintain certain records relating to employment conditions, disputes, settlements, and workforce restructuring decisions.
Authorities responsible for enforcement may review these records during inspections or dispute proceedings.
In practical terms, employers should therefore maintain clear documentation of:
- employment policies and service conditions
- disciplinary proceedings and actions taken
- conciliation or dispute proceedings
- settlements or agreements with workers
Well-organised records often play a critical role in defending employer decisions during litigation or regulatory inquiries.
Conclusion – how to comply with the Industrial Relations Code, 2020
The IR Code, 2020 marks a significant shift in India’s legal framework governing industrial relations. By consolidating multiple legacy statutes into a single code, the intent of the legislation is to create a clearer and more structured system for managing workplace disputes and labour relations.
In practical terms, organisations that develop an understanding of IR Code 2020 will be better positioned to manage workforce relations, drafting standing orders, collective bargaining processes, and dispute resolution procedures effectively. –
From an employer’s perspective, the IR Code emphasises the importance of structured dialogue with employees, following prescribed procedures when making changes to service conditions, transparent decision-making, and compliance with statutory procedures when managing workforce changes.
Organisations that proactively establish grievance redressal mechanisms, maintain clear employment policies, and adopt legally compliant workforce management practices tend to be in a stronger position to manage industrial relations. This approach can help reduce friction and limit exposure to disputes.
At Corrida Legal, we regularly advise organisations on labour law compliance, industrial relations strategy, union negotiations, and dispute resolution under India’s evolving labour code framework.
Disclaimer: This article is intended for informational purposes only and does not constitute legal advice. Specific advice should be sought based on the facts of each case and the applicable regulatory framework.
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