Introduction – Industrial Relations Code employer compliance
The Industrial Relations Code, 2020 (“Code”) consolidates three existing laws governing the industrial relations between the employer and employee i.e. the Trade Unions Act, 1926, Industrial Employment (Standing Orders) Act, 1946, and Industrial Disputes Act, 1947. The aim of the Code is to streamline the framework governing industrial relations by providing a comprehensive law for fostering harmonious employer-employee relations, mechanism for dispute resolution between the employer and employee, and other provisions. The Code was enacted on September 28, 2020 and became effective from November 21, 2025. The Code applies to all industrial establishments with 10 or more workers. Employers must carefully review the statutory requirements and the recognition applicable on the trade union, standing orders, and retrenchment. The careful navigating of the Code is mandatory to ensure that the establishments are able to mitigate the penalties of up to ₹50,000 fines, or imprisonment up to one year for violations.
This article outlines action points to ensure compliance with the Code. The Code emphasises that the establishment undertakes proactive measures for compliance with the statutory norms, mechanism for dispute resolution and workforce management. The compliance requirements which are drawn from the Code sections and clauses are provided herein to establish steps to promote stability while reducing exposure to litigation.
From a regulatory perspective, employers must carefully assess their Industrial Relations Code employer compliance obligations to ensure lawful workforce management, dispute resolution, and trade union engagement under the Industrial Relations Code, 2020.
1. Establish Bi-Partite Forums: Promote Internal Dialogue
Collaborative mechanisms are mandatory—build them early:
- Constitute Works Committees: Any establishment which has 100 or more workers to form a Work Committee comprising members as provided by the appropriate government.
- Grievance Redressal Committees: Any establishment which has 20 or more workers are obligated to create grievance redressal committee to address worker complaints. The Code further provide the number of members which are required to constitute the committee and the mechanism for appeal.
Establishing such internal forums forms an essential part of labour law compliance under the Industrial Relations Code and encourages early resolution of workplace disputes.
Tip: It is advised that the committees must be formed in compliance with the Code and the details of committee should be displayed on notice boards.
2. Navigate Trade Union Dynamics: Facilitate Recognition and Compliance
The Code provides the following provisions governing Trade Unions:
- Recognise the trade unions: The Code establishes a Registrar of Trade Union and provides mechanism for the registration of the trade union.
- Cancellation of registration: The Code mandate that the in the event of cancellation of any application for trade union the same must be communicated with the 60 days of such application while stating the grounds of such cancellation.
- Office-bearers: The trade union shall ensure appointment of office bearers. The Code mandates that such office bearer must not be convicted of moral turpitude in the preceding five years.
Employers should therefore understand trade union recognition rules in India to ensure lawful negotiations with negotiating unions or negotiating councils under the Industrial Relations Code.
Pro Tip: The employer, employee or the union must ensure that it does not undertake any actions which violates the Schedule II of the Code.
3. Certify Standing Orders: Standardise Workplace Rules
It is advised that in order to remain compliant with the Code with respect to the standing order the following provisions may be referred to by the employer:
- Prepare and submit drafts: The provisions of the standing order shall apply to all establishment having 300 employees. It is further mandated under the Code that the employer prepare draft orders covering classification, shifts, attendance, holidays, termination, and misconduct within six months from the Code becoming operational.
- Obtain certification: The Code provides a certificate can be obtained from the competent authority. It further provides the grievance redressal mechanism and the procedure of making an appeal.
- Timely discipline: The Code mandates that any inquiry conducted under the Code shall be completed within 90 days.
- Modify judiciously: Oral evidences with respect to the dispute arising out of the standing order which contradicts to the certified standing order are inadmissible in the court of law.
Preparing and certifying standing orders is a central requirement for standing orders compliance under IR Code 2020 for establishments crossing the prescribed employee threshold.
Action Item: Exemptions to the provisions may arise out of official notification which is likely to exempt establishments having less than 50 workers.
4. Issue Notices for Changes: Consult Before Altering Terms
The Code prevents the unilateral implementation of change to terms of service and shifts focus to mutual discussion. Any unilateral decision is likely to invite disputes. To this effect the provisions provided under the Code are as follows:
- Provide 21-day notice: The employer while amending any terms which have been provided in accordance with the third schedule shall requiring issuing of notice to the concerned employee within 21 days.
- Engage stakeholders: In certain circumstances such as emergent situations which require change in location, the consultation with Grievance Redressal Committee is required.
Employers should ensure such procedural safeguards are followed to avoid industrial disputes under the Industrial Relations Code.
Tip: It is advised that professional consultations to undertaken prior to any amendments to ensure risk mitigation and defence against claims.
5. Leverage Dispute Resolution: opt for Voluntary and Structured Pathways
The Code provides for the mechanism which must be implemented to ensure dispute resolution. The key provisions have been reproduced hereinbelow:
- Refer voluntarily to arbitration: The employer and employee. may subject to voluntary arbitration agreement prefer arbitral proceeding to any issue arising out of the Code.
- Appoint/engage officers: The Employer is required to cooperate with conciliation officers. Any issue left pending dispute shall be referred toIndustrial Tribunal or National Industrial Tribunal for adjudication.
- Facilitate proceedings: Provide evidence within timelines the timeline provided under the Code. The employer is further required to pay full wages during the pendency of proceeding before High Court and Supreme Court.
- Transfer legacies: The pending cases under pre-existing laws will be transferred before the National Industrial Tribunal under the new Code.
Pro Tip: The employer may seek out protection of confidential matters such as trade secrets during the dispute proceeding.
6. Regulate Strikes and Lockouts: Maintain Operational Continuity
The Code further provides provisions for the disruptions and the provisions for redressal of the same. The employers and employee are required to undertake proactively steps which include:
- Strike procedure: The employee must provide a notice for strike indicating the date of such strike and must comply with the procedural requirements prescribed under the law.
- Lockout: No employer must provide notice for lock-out which is in compliance with the statutory requirements provide under the Code prior to any lockout.
Employer Step: Maintain records of the notice and other procedural requirements to ensure documented compliance of the Code.
7. Manage Lay-Offs, Retrenchments, and Closures: Compensate Fairly
Any establishment which is likely to reduce its workforce must ensure the due process provided under the Code. The key obligations are provided hereinbelow:
- Lay-Off protocols: The establishments which are having more than 300 workers are required to seek permission of the relevant authority prior to any lay-off. Workers who have completed one year are entitled to receive 50% of the basic wage upon such lay off.
- Retrenchment preconditions: The Code mandates that the employer must give one-month notice or make payment of equivalent wage. Notice must be served in the manner which has been prescribed by the appropriate government.
- Closure notices: Employer which has more that 50 employees are required to provide a 60 days’ notice prior to any closure.
- Transfer compensation: In the event the employee has completed one year of continuous service, the employee shall be entitled to transfer compensation of 15 days wage.
Employers must carefully follow layoff and retrenchment rules under Industrial Relations Code to ensure workforce restructuring decisions remain legally defensible.
8. Prohibit Unfair Labour Practices: Cultivate Ethical Relations
An employer must ensure that mechanisms have been established to ensure that all safeguards are undertake by the employer and promotes the employer to be emphasis on self-audit to ensure compliance with the law:
- Avoid listed practices: The Code provides the list of practices which are condemned under the Schedule II of the Code for both the employer and trade union which includes prohibition of actions which are discriminating or false promises. It further mandates that no worker should be coerced.
- Enforce: Any complaints filed for non-compliance of the schedule II before the relevant authority which may cause for passing of order for cease-and-desist.
9. Record-Keeping and Reporting: Ensure Audit-Readiness
The Code provides provisions for the maintaining of records and the reporting of the same. The specific provisions have been provided here in below:
Maintain registers: The employer must maintain a register for muster rolls, standing orders, notices and returns. The code has provided provisions for maintaining of such registers in an electronic format.
Frequently Asked Questions (FAQs) – Industrial Relations Code employer compliance
1. What is the Industrial Relations Code, 2020?
The Industrial Relations Code, 2020 is a code which has been implemented to promote ease of doing business in India by consolidating the three major labour laws—the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947 into a single framework.
2. Which establishments must comply with the Industrial Relations Code?
While the Code primarily governs the establishments which have employed 10 or more employees, however the Code also comprises of specific number of employees for certain provisions.
3. What are the key employer obligations under the Industrial Relations Code?
Employers to whom the provisions of the Industrial Relations Code apply must comply with the statutory requirements relating to recognition of trade unions, standing orders, establishment of grievance redressal committees, layoffs, retrenchment, strikes, and lockouts.
4. What are standing orders under the Industrial Relations Code?
Standing orders are written rules governing the terms and conditions of employment and must comprise of the subject matter which are specifically provided under the Code which includes but is not to subject matter such as shift working, classification and leave etc.
5. What are the rules for layoffs and retrenchment under the Industrial Relations Code?
Employers must comply with the provisions provided under the Code which includes the obligation to follow specific notice requirements, compensation obligations, and procedural safeguards prior to any layoffs, retrenchment, or closure of establishments.
Conclusion – Industrial Relations Code employer compliance
The Code empowers employers with more streamlined rules while mandating a shift from adversarial to collaborative industrial ecosystems in any establishment. It provides a comprehensive regulation which covers trade union and industrial disputes. The Code for starters, mandates the forming of committees, certify orders, and providing mechanism for disputes resolution.
Corrida Legal provides Industrial Relations Code expertise to entities by providing services ranging from audits for compliance of the Code to legal representation before the tribunal . Contact us for assistance and readiness with respect to the compliance roadmaps, drafting, or virtual training.Disclaimer: This is informational, not legal advice. Consult the full Code and experts for bespoke applications.