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Industrial Relations Code 2020 Guide

Union recognition, lay-off, retrenchment, and standing orders under the IR Code

Industrial Relations Code 2020 Guide

On Wednesday, 20 May 2026, the HR head of the 220-person electrical equipment manufacturer in Pune sat in the conference room with three letters in front of her. One letter, on the letterhead of a registered trade union active at the establishment, claimed the support of 105 of the 192 workers on the muster roll, that is 54.7%, with the figures circled in red by the union's General Secretary, and demanded recognition as the sole negotiating union under Section 14(3) of the Industrial Relations Code, 2020. A second, dated the previous Monday from the works manager, proposed an extension of the second-line shift to a 2 PM to 11 PM cadence beginning Monday 29 June, twenty-six working days away. A third, slid under her door before lunch, was a CFO note asking for the all-in retrenchment cost of three press operators as part of the FY 2026-27 capacity rationalisation, each on basic plus dearness allowance of ₹30,000 a month, each with seven years of continuous service.

The 192 workers on the muster roll were the same 192 the threshold table had run on through the year. The 220 figure on the company's payroll was the employee count for the Code on Wages and the Code on Social Security under the distinction in Employee vs Worker: Labour Codes; the 192 came down by the count of managers, administrators, and supervisors drawing more than ₹18,000 a month, who fall outside the worker definition under Section 2(zr) of the IR Code. At 192 workers, the establishment sat above the 20-worker threshold for the Grievance Redressal Committee under Section 4 (constituted on 28 November 2025) and above the 100-worker threshold for the Works Committee under Section 3 (the appropriate Government had not issued a constitution direction). At 192 it sat well below the 300-worker threshold for Standing Orders under Section 28(1) and for chapter X of the Code on lay-off, retrenchment, and closure.

Three letters, three different statutory clocks running. Recognition under Section 14(3) carried no waiting period: the bare-text mechanism gives a union commanding 51% or more of muster-roll support a right to be recognised as sole negotiating union, with recognition that would run for three years and could be extended by mutual agreement to a total of five years under Section 14(6). A shift change of the kind the works manager had proposed demanded a 21-day notice to affected workers under Section 40 before the change took effect, the clock running from the date the notice issued. Retrenchment under Sections 70(a) and 70(b) carried one month's prior notice to the worker, fifteen days' average pay per completed year of continuous service, and a Section 83 contribution to the Workers' Re-Skilling Fund of fifteen days of last-drawn wages, all of which attached the moment the retrenchment was effected.

The Wage Code, covered in Code on Wages 2019 Guide, was paid in arithmetic and audited in registers. The IR Code is paid in clocks.

In force from 21 November 2025 under Gazette Notification S.O. 5320(E), the Code's substantive duties have applied since the commencement date. The IR Code (Removal of Difficulties) Order, 2025, issued under Section 103 of the Code as S.O. 5683(E) on 8 December 2025, and the IR Code (Amendment) Act, 2026 (Act 1 of 2026, Presidential assent on 16 February 2026, with retrospective effect to 21 November 2025) preserve the continuity of Labour Courts, Industrial Tribunals, and statutory authorities under the repealed Acts until the Code's equivalents are operational. Draft Industrial Relations (Central) Rules, 2025 were re-published in the Gazette on 30 December 2025 under G.S.R. 930(E); the 30-day public-comment window closed on 30 January 2026, and final Rules had not been gazetted as of 25 April 2026. The substantive duties below run on the bare Code's text, with prescribed forms drawn from the still-draft 2025 Rules and from saved older-Act notifications under the parallel saving clauses read with Section 6 of the General Clauses Act, 1897. Almost every duty in the Code sits in the live-and-self-executing first layer of the three-layer rollout from 21 November 2025; the Workers' Re-Skilling Fund's collection account, reconciliation, and disbursement rules are the one substantive gap, sitting in the held-back layer pending separate notification of the collection machinery.

IR Code Obligations

Your IR Code obligations

ObligationWhat it requiresWhere it lives in the Code
Grievance Redressal CommitteeConstitute one or more committees at 20 or more workers; equal employer-worker representation up to 10 members; women representation proportionate; 30-day target for proceedingsSection 4
Works CommitteeConstitute on a general or special order from the appropriate Government at 100 or more workers; worker representatives not fewer than employer representativesSection 3
Recognition of negotiating unionSingle registered union as sole negotiating union; multiple unions, the one with 51% or more muster-roll support as sole negotiating union; multiple unions without 51%, a negotiating council with one representative per 20% slabSection 14
Standing OrdersAdopt the Model Standing Orders, or draft a custom set within six months of the chapter applying; certification within 60 days or deemed certified on inactionSections 28 to 39
21-day notice for Third Schedule changesEleven categories of service-condition change, listed in the Third Schedule; notice is a precondition for the change to take effectSection 40 read with the Third Schedule
Lay-off, retrenchment, and closure (50 to 299 workers)Notice to the appropriate Government before action; retrenchment notice of one month to the worker, 15 days' average pay per completed year, 60-day closure noticeChapter IX, Sections 65 to 76
Lay-off, retrenchment, and closure (300 workers and above)Prior permission from the appropriate Government; retrenchment notice of three months; 90-day closure notice with permitChapter X, Sections 77 to 82
Re-Skilling Fund contribution15 days' last-drawn wages on every retrenchment, separate from and in addition to retrenchment compensation under Section 70(b); credited within 45 days under Section 83(3)Section 83
Strike and lockout reporting5-day reporting on a notice received or issued; same-day reporting on a strike or lockout already in existenceSection 62(3) and (6)

This reference holds the article's body sections, each taken into operation below in the order the IR Code obligations stack on a working establishment.

The Threshold Ladder

The IR Code threshold ladder

The IR Code is the most threshold-sensitive of the four Codes. Whether a duty applies, what regime governs a retrenchment, and what process attaches to a closure all turn on the worker count at the establishment. The count is of workers, not employees: managers and administrators fall outside the worker definition regardless of pay, and supervisors fall outside only where their wages exceed ₹18,000 per month under Section 2(zr)(iv).

Worker countWhat kicks inCode reference
20 or moreGrievance Redressal CommitteeSection 4
50 to 299Lay-off compensation under Chapter IX (Sections 67 to 69 specifically apply at the 50-worker floor); retrenchment under Section 70 has no numerical thresholdChapter IX
100 or moreWorks Committee, on a general or special order from the appropriate GovernmentSection 3
300 or moreStanding Orders applicability under Section 28(1); Chapter X regime for lay-off, retrenchment, and closure (prior permission from the appropriate Government)Sections 28 to 39 and Chapter X

The Pune manufacturer's 192 workers placed it firmly in chapter IX for any lay-off, retrenchment, or closure event, and below the 300-worker threshold for Standing Orders applicability under Section 28(1). When an establishment's worker count crosses 300, several obligations attach in one move: Standing Orders applicability, the prior-permission regime under chapter X for any lay-off or retrenchment or closure, and a step up on notice periods (one month becomes three months on retrenchment under Section 79(1)(a); 60 days becomes 90 days on closure under Section 80). The financial liabilities to the worker are the same in both regimes; the regulatory friction is materially heavier in chapter X.

Trade Unions and the 51% Rule

Trade unions and the 51% rule

Section 14 of the IR Code addresses a long-standing question, that of which union binds the workforce in negotiation with the employer when more than one trade union exists at an establishment. The answer turns on muster-roll support.

Section 14(1) carries the umbrella rule: every industrial establishment must have either a negotiating union or a negotiating council. Three logical paths then run off Section 14. A single registered union at the establishment is recognised as the sole negotiating union under Section 14(2), subject to prescribed conditions. Where multiple registered unions exist and one commands 51% or more of worker support on the muster roll, Section 14(3) recognises that union as the sole negotiating union. Multiple unions without a 51% holder constitute a negotiating council under Section 14(4), with one representative per 20% slab of muster-roll support and proportionate representation for any remaining fraction.

Recognition runs for three years from the date of constitution under Section 14(6). The provision permits a mutual-agreement extension to a total of five years; the outer limit is five years total, not three plus five, which matters when the company and the workforce are negotiating renewal terms.

Registered unions at the establishmentOutcomeSection
One registered unionRecognise it as sole negotiating unionSection 14(2)
Multiple registered unions, one with 51% or more muster-roll supportRecognise that union as sole negotiating unionSection 14(3)
Multiple registered unions, none with 51%Constitute a negotiating council with one representative per 20% slabSection 14(4)

The union's 54.7% on the muster roll cleared the 51% threshold under Section 14(3). Recognition was not a discretionary call; the bare-text mechanism is automatic, and where the support claim is established the union is recognised. Verification of the claim, that is checking each of the 105 supporting workers against the muster roll, ruling out double-counts where a worker has signed for two unions, and confirming current employment status, sits in the prescribed procedure that the still-draft Central Rules will finalise. Until those Rules notify, the practitioner approach is to verify against the muster roll the company itself maintains, document the exercise in a verification memo signed by the HR head and an authorised representative of the union, and intimate the appropriate Government's authority of the recognition.

The HR head's response on 20 May went out the same day: a written acknowledgement of the demand, a written request for documentation of the support claim, and a verification meeting scheduled for the following Tuesday. The intimation to the Maharashtra Office of the Commissioner of Labour followed once the verification closed.

The Grievance Redressal Committee

Section 4 of the IR Code requires every industrial establishment with 20 or more workers to constitute one or more Grievance Redressal Committees. The Committee's purpose is the resolution of an individual worker's grievance, that is a wage dispute, a disciplinary action, or a service-condition complaint, in a forum that sits between the worker and a formal labour-court action.

Composition runs on parity, with equal numbers of employer representatives and worker representatives sitting on the Committee, capped at ten members in total. The chairperson alternates yearly between the employer and worker sides. Women representation is at least proportionate to the share of women in the total workforce. The filing window for an individual grievance is one year from the date the cause of action arises. A thirty-day target for completing proceedings runs as a directory timeline under Section 4(6), rather than a mandatory deadline.

The Pune manufacturer's GRC was constituted on 28 November 2025, within seven days of the IR Code's commencement, at the company's then 192-worker count. Five employer representatives, five worker representatives, two women on the worker side reflecting the company's roughly 25% female workforce, reconstituted on 1 January 2026 to accommodate three rotation changes. The HR head's file carries the constitution memo, the meeting minutes for the eleven applications received between commencement and the date of writing, and the disposition report against each application's filing date. None has crossed the thirty-day target by more than seven working days.

The Works Committee

Section 3 of the IR Code provides for a Works Committee in any industrial establishment with 100 or more workers, constituted on a general or special order from the appropriate Government. The Committee is a tripartite harmony forum, broader in remit than the Grievance Redressal Committee: matters of common interest between the employer and the workers, raised before they harden into disputes.

Composition runs by Section 3(2): worker representatives are not fewer than employer representatives, and worker representatives are chosen from the workers of the establishment, in consultation with the registered trade union where one exists, in accordance with the prescribed procedure under the Central Rules.

The Pune manufacturer's 192 workers cleared the 100-worker threshold the moment the Code came into force on 21 November 2025. As of 25 April 2026, the appropriate Government for Maharashtra factories had not issued a constitution order to the establishment. The HR head's file carries a single-page note tracking the position; if and when the order arrives, a Works Committee follows within the prescribed time, and the registered trade union at the establishment is consulted on the worker representative panel under Section 9.

Standing Orders

Standing Orders, at 300 workers and above

Section 28(1) of the IR Code raises the Standing Orders applicability threshold to 300 workers. Establishments with fewer than 300 workers are not required to maintain certified Standing Orders, in a substantial change from the older Industrial Employment (Standing Orders) Act, 1946, which carried the threshold at 100 workers.

Substantive Standing Orders provisions sit in Sections 29 to 39 of the Code. Section 29 directs the Central Government to publish Model Standing Orders for industries; the Centre published three sectoral Model Standing Orders in the Gazette on 31 December 2020, one for the service sector under G.S.R. 814(E), one for the manufacturing sector (textually framed as 'all sectors except mines and service sector') under G.S.R. 815(E), and one for mines under G.S.R. 816(E). Custom drafting under Section 30(1) requires every covered employer to prepare draft Standing Orders within six months of the chapter becoming applicable, and to forward them to the Certifying Officer under Section 30(2). Adoption is the alternative path under Section 30(3): the notified Model Standing Orders are deemed certified for the establishment once the adoption is intimated to the Certifying Officer.

PathWhat it requiresOutcome
Adopt the Model Standing Orders (Section 30(3))Review the latest notified version on the Ministry of Labour and Employment website; intimate the Certifying Officer of the adoptionDeemed certified, subject to any direction the Certifying Officer issues to amend on observation
Draft custom Standing Orders (Section 30(1) and (2))Prepare within six months of Chapter IV applicability, based on the Model and covering matters in the First Schedule; consult the recognised sole negotiating union or negotiating council; forward to the Certifying Officer for certificationCertified by the Certifying Officer; the proviso to Section 30(5) provides that where the Certifying Officer does not complete certification within sixty days, the draft Standing Orders shall be deemed to have been certified on the expiry of that period

For most mid-sized and large employers, the Model is the simpler route. The custom path is worth the effort where the industry carries practices the Model does not contemplate, or where the employer wants to preserve a set of customary conditions the Model would override.

At 192 workers, the Pune manufacturer placed well below the 300-worker threshold, with Standing Orders not yet applicable to the establishment. The HR head's file carries a transition note: when the worker count crosses 300, the six-month clock under Section 30(1) starts, and a draft (Model adoption or custom draft) goes to the Certifying Officer in time.

A common point of confusion about pre-Code state amendments

A practitioner question that surfaces often turns on whether the 100-to-300 jump happened earlier in some states. The short answer is no, not for Standing Orders. Several states (Rajasthan from 2014, Andhra Pradesh from 2015, Madhya Pradesh, Haryana from 2016, Uttar Pradesh, Gujarat, Jharkhand from 2016, and Assam from 2017) raised their workforce threshold to 300 well before the Code, but the amendments were almost entirely to chapter V-B of the Industrial Disputes Act, 1947, that is to the threshold for prior government permission for lay-off, retrenchment, or closure, not to the Industrial Employment (Standing Orders) Act, 1946. Madhya Pradesh's 2020 Ordinance, separately, raised its state Industrial Employment (Standing Orders) Act 1961 threshold from 50 to 100 workers, an exception to the broader 'almost entirely Chapter V-B' pattern.

Karnataka's pre-Code action followed a separate route: an exemption from the Standing Orders Act 1946 for IT and ITeS establishments, not a threshold change. The 100-to-300 jump for Standing Orders applicability happened only with the IR Code 2020. An employer in any of those states that operated above 100 workers but below 300 stopped maintaining Standing Orders only on 21 November 2025; before that date, the older Industrial Employment (Standing Orders) Act, 1946 applied at the 100-worker threshold.

The 21-Day Notice

The 21-day notice for the Third Schedule

Section 40 of the IR Code requires every employer to give 21 days' notice in the prescribed manner before any change in the conditions of service applicable to workers, where the change falls into any of the eleven categories listed in the Third Schedule. The notice is a statutory precondition for the change to take effect; a change implemented without the notice is not validly in force.

The Third Schedule list runs eleven items deep, in the order it appears in the Code: wages, including the wage period and the mode of payment; contribution paid or payable by the employer to any provident fund or pension fund or for the benefit of the workers under any law for the time being in force; compensatory and other allowances; hours of work and rest intervals; leave with wages and holidays; starting, altering, or discontinuing shift working otherwise than in accordance with standing orders; classification by grades; withdrawal of any customary concession or privilege or change in usage; introduction of new rules of discipline, or alteration of existing rules, except in so far as they are provided in standing orders; rationalisation, standardisation, or improvement of plant or technique which is likely to lead to retrenchment of workers; and any increase or reduction (other than casual) in the number of persons employed or to be employed in any occupation, process, department, or shift.

Almost every salary restructuring sits inside item 1 or item 3, and almost every shift change sits inside item 6. The 21-day clock runs from the date the notice issues to the affected workers in the prescribed manner; the change can take effect on day 22 at the earliest. Document the notice and the mode of delivery in the worker file against an Inspector-cum-Facilitator request to verify compliance.

The Pune manufacturer's shift change for the second-line operators sat squarely inside item 6 of the Third Schedule. Dated Monday 18 May, the works manager's letter proposed a 29 June implementation. The HR head's response went out on the same Wednesday she received the union's letter, with a written notice to all twenty-four affected workers on the second line, posted on the notice board and circulated by email, in English, Hindi, and Marathi. The Section 40 clock ran from 20 May; the shift change took effect on 11 June at the earliest, eighteen days ahead of the 29 June date the works manager had proposed, and well inside the statutory minimum.

A separate and frequently-missed point: the FY 2026-27 salary restructuring the Pune manufacturer had run before April's payroll, recomputing the engineer's wage base from ₹25,000 to ₹35,000 under the 50% rule, was itself a Section 40 change. Item 1 of the Third Schedule covers wages, including the wage period, and item 3 covers compensatory and other allowances; both items were in scope for the restructure. The Section 40 notice for that restructure had been issued on 6 April, with implementation on the 27 April pay run, and the audit trail sat in the HR file. Salary restructures touch the Third Schedule routinely, and the 21-day notice is the operational precondition that has to run before the new structure can be paid.

Lay-off, Retrenchment, Closure

Lay-off, retrenchment, and closure, the two regimes

The Code splits the rules for lay-off, retrenchment, and closure into two regimes based on the worker count at the establishment. Chapter IX (Sections 65 to 76) applies to industrial establishments with 50 to 299 workers, with specific carve-outs by section: the lay-off compensation provisions in Sections 67 to 69 apply at the 50-worker floor; retrenchment under Section 70 applies more broadly without a numerical worker threshold; the 60-day closure notice runs under Section 74 with a copy to worker representatives. Chapter X (Sections 77 to 82) applies at 300 workers and above, with prior government permission rather than notice.

The substantive entitlements to a worker who is laid off, retrenched, or whose establishment closes are the same in both regimes. What differs is the employer's obligation to the appropriate Government before the action runs.

ObligationChapter IX (50 to 299 workers)Chapter X (300 workers and above)
Before lay-off, retrenchment, or closureNotice to the appropriate GovernmentPrior permission from the appropriate Government
Lay-off compensation to the worker50% of basic wages plus DA per laid-off day, 1 year continuous service required (Section 67); a 45-day cap during any rolling 12-month period applies only where the worker and the employer have agreed to itSame 50% rule and 1-year eligibility; the rolling 45-day cap subject to agreement applies the same way
Retrenchment notice to the worker1 month (Section 70(a))3 months (Section 79(1)(a))
Retrenchment compensation15 days' average pay per completed year of continuous service, or any part of a year in excess of 6 months (Section 70(b))15 days' average pay (same formula and proviso)
Re-Skilling Fund contribution15 days' last-drawn wages per retrenched worker (Section 83)15 days' last-drawn wages (same)
Closure notice60 days to the appropriate Government, copy to worker representatives (Section 74)90 days, prior permission, copy to worker representatives (Section 80)
Compensation for unavoidable-circumstance closureCapped at 3 months' average pay under Section 75; Explanation excludes financial difficulties, accumulation of stocks, expiry of a lease, and exhaustion of minerals from "unavoidable circumstances"Same rule; same 3-month cap
Transfer of ownership or management (Section 73)Workers with 1 year or more of continuous service entitled to notice and retrenchment compensation, unless the provisos to Section 73 applySame rule

A worked example runs the CFO's question on the three press operators. Each is on basic plus dearness allowance of ₹30,000 a month. Section 2(d) defines 'average pay' for a monthly-paid worker as the average of wages payable in three complete calendar months preceding the date the average pay becomes payable; in payroll practice, where the monthly wage is uniform, this is conventionally read as monthly wages ÷ 30, giving a daily figure of ₹30,000 ÷ 30 = ₹1,000. Each operator carries seven completed years of continuous service. The retrenchment runs under chapter IX because the establishment sits at 192 workers, well below the 300-worker chapter X threshold.

Cost elementCalculation per workerAmount per worker (₹)
Retrenchment compensation under Section 70(b)15 days × 7 years × ₹1,000 per day1,05,000
Re-Skilling Fund contribution under Section 8315 days × ₹1,000 per day15,000
Notice pay (chapter IX, 1 month) under Section 70(a)1 month × ₹30,00030,000
Total per worker, chapter IX1,50,000
Three-worker total, chapter IX4,50,000
For comparison, notice pay (chapter X, 3 months)3 months × ₹30,00090,000
Total per worker, chapter X2,10,000
Three-worker total, chapter X6,30,000

Chapter IX also runs a notice to the appropriate Government before the retrenchment takes effect, in addition to the worker-level notice and compensation. Under chapter X, the prior-permission process adds time and commercial uncertainty to the same cash outlay. A company at 280 workers planning to retrench three operators sits inside chapter IX; the same company at 305 workers, by virtue of three new hires that crossed the threshold the week before, runs the same retrenchment under chapter X. Crossing 300 is a structural compliance event distinct from the hiring decision that crosses it.

The Section 70(b) average-pay formula uses the recomputed wage base from the 50% rule where the cadre's structure carries an excluded basket above the half-threshold. For the three press operators in this article, the assumed structure of basic ₹25,000, DA ₹5,000, HRA ₹6,000, conveyance ₹2,000, and special allowance ₹2,000, summing to total monthly remuneration of ₹40,000, has the wages component at ₹30,000 and the excluded basket at ₹10,000, well below half of ₹40,000 (that is ₹20,000), so no recomputation runs and the wage base for retrenchment compensation, the Re-Skilling Fund contribution, and the notice pay all stand at the unrecomputed ₹30,000. Cadres carrying an excluded-basket-heavy structure (a senior production engineer, for example) would see the recomputation lift the retrenchment cost in the same proportion as it lifted PF, gratuity, and bonus liability.

The Re-Skilling Fund

The Workers' Re-Skilling Fund

Section 83 of the IR Code requires every employer to contribute to a Workers' Re-Skilling Fund on every retrenchment from 21 November 2025 forward. The contribution is fifteen days of the worker's last-drawn wages, or such other number of days as the Central Government may notify, separate from and in addition to the retrenchment compensation under Section 70(b). Section 83(3) requires the contribution to be credited to the worker's account within forty-five days of the retrenchment.

Substantive liability has applied since 21 November 2025. The Fund's collection account, the reconciliation procedure, and the disbursement rules sit in the held-back layer of the rollout, awaiting separate notification of the operating machinery. Until that machinery notifies, the practical compliance approach is dual: book the liability on the company's books at the moment the retrenchment is effected, and ring-fence the cash so the contribution can be paid against accumulated retrenchment events when the collection mechanics land.

For the Pune manufacturer's three press operators, the Section 83 contribution is ₹15,000 per worker, ₹45,000 in total, separate from the ₹3,15,000 retrenchment compensation under Section 70(b) and the ₹90,000 notice pay under Section 70(a). The combined exit cost on the three retrenchments is ₹4,50,000, of which ₹45,000 sits as an accrued payable to the Fund, awaiting the collection notification.

The most common single mistake in IR Code compliance review concerns this section. Payroll teams compute the Section 70(b) compensation on retrenchment and book the Section 83 contribution as zero, on the assumption that the held-back collection machinery means no contribution is yet due. The bare-text reading is the opposite: the contribution attaches at the moment of retrenchment, and the holding pattern is on collection, not on accrual. A retrospective catch-up on accumulated retrenchments will land in the quarter the collection notification issues; companies that have provisioned absorb the rule with no operational shock when it lands. The held-back-layer provisioning approach sits in the implementation plan that closes this series.

Fixed-term employment

Section 2(o) of the IR Code formally recognises fixed-term employment. A fixed-term worker engaged under a written contract for a specified duration receives the same wages, allowances, working conditions, and statutory benefits as a regular worker doing the same or similar work, with the benefits accruing pro-rata to the tenure where the bare-Act formula or the rules permit pro-rata accrual.

Termination on contract expiry is excluded from the definition of "retrenchment" under Section 2(zh)(iv). The retrenchment package (notice, Section 70(b) compensation, Section 83 Re-Skilling Fund contribution) does not run on the fixed-term worker at contract expiry, provided the employer has honoured the terms of the contract. The exclusion from retrenchment falls only where the engagement is genuine fixed-term: contractual paperwork in writing, defined start and end dates, structured benefits, work scope on par with the regular workforce.

Gratuity for fixed-term employees runs on Section 53(1)(d) of the Code on Social Security as the trigger event, read with the second proviso to Section 53(1) which waives the five-year continuous-service requirement for fixed-term workers, and the third proviso to Section 53(2) which requires the employer to pay gratuity on a pro-rata basis. Section 2(o)(c) of the IR Code itself states that a fixed-term worker is eligible for gratuity if the worker renders service under the contract for one year. (Code on Social Security 2020 takes the gratuity arithmetic apart, including the pro-rata treatment for fixed-term workers and the 26-day divisor used under Explanation 3 to Section 53.)

For the Pune manufacturer, the fixed-term framework is relevant on two fronts. Seasonal hires for the monsoon-period inventory run, who are engaged on three-month and six-month written contracts at the same operator wage band as the regular workforce, are paid pro-rata bonus, pro-rata leave, and gratuity on contract expiry per the SS Code framework. Engineers brought in on twelve-month project contracts for the FY 2026-27 product redesign receive the same benefits suite as permanent engineers, with the pro-rata gratuity payable on the contract's twelve-month expiry.

Strikes and Lockouts

Strikes and lockouts

Section 62 of the IR Code restricts when a strike by workers or a lockout by the employer can commence, and imposes reporting duties on the employer in both directions. The restrictions and the reporting obligations apply to every industrial establishment, a widening from the older Industrial Disputes Act regime where the strike-notice obligations under Section 22 of the older Act applied only to public-utility services.

RestrictionRule
Notice window for strike or lockoutNotice may be given not more than 60 days before the proposed strike or lockout (Section 62(1)(a))
Earliest commencement after noticeNot within 14 days of giving the notice (Section 62(1)(b))
No commencement before the date specified in the noticeSection 62(1)(c)
Bar during conciliationNo strike or lockout during the pendency of any conciliation proceedings before a Conciliation Officer (Section 62(1)(d))
Bar after conciliationNo strike or lockout within 7 days after the conciliation proceedings conclude (Section 62(1)(d))
Bar during adjudicationNo strike or lockout during the pendency of proceedings before an industrial Tribunal and 60 days after conclusion (Section 62(1)(e))
Bar during arbitrationNo strike or lockout during the pendency of arbitration; the 60-day bar after the conclusion of arbitration applies only where a notification has been issued under Section 42(5) of the Code (Section 62(1)(f))
Bar during settlement or awardNo strike or lockout during any period in which a settlement or award is in operation, in respect of any of the matters covered by the settlement or award (Section 62(1)(g))

A strike or lockout that breaches any of these restrictions is illegal under the Code and exposes the party to the penalties in Chapter XIII (Offences and Penalties), particularly Section 86.

Reporting obligations on the employer run on two clocks. A strike notice received from workers, or a lockout notice issued by the employer, is reported to the appropriate Government or prescribed authority and to the Conciliation Officer within five days under Section 62(6). A strike or lockout already in existence on the date it is declared is reported to the Conciliation Officer the same day under Section 62(3).

Conciliation runs on its own clock: a conciliation proceeding is deemed to have commenced on the date of the first meeting held by the Conciliation Officer after receipt of the strike or lockout notice (Section 60(1)). Where the conciliation follows a Section 62 notice, the Conciliation Officer sends a report to the parties and the appropriate Government within 14 days of commencement (Section 53(5)); in any other case, the report runs at 45 days, extendable by the Government or by mutual agreement of the parties.

Operational status

The IR Code is in force from 21 November 2025 by Gazette Notification S.O. 5320(E). The IR Code (Removal of Difficulties) Order, 2025 (S.O. 5683(E) of 8 December 2025), issued under Section 103 of the Code, patched the transition administratively; the IR Code (Amendment) Act, 2026 (Act 1 of 2026, Presidential assent on 16 February 2026) then validated the position legislatively, with Section 1(2) deeming the amendment to have come into force from 21 November 2025. Together the Order and the Act preserve continuity of Labour Courts, Industrial Tribunals, and statutory authorities under the older Acts until the Code's equivalents are operational. Existing references in pending matters, registers, and standing orders to the older Acts read as references to the equivalent provisions under the IR Code through the transition.

Draft Industrial Relations (Central) Rules, 2025 were re-published in the Gazette on 30 December 2025 under G.S.R. 930(E), in supersession of the Industrial Disputes (Central) Rules, 1957 and the Industrial Employment (Standing Orders) Central Rules, 1946. The public-comment window closed on 30 January 2026. As of 25 April 2026, final Central Rules had not been gazetted. State Rules are mixed: Karnataka, Arunachal Pradesh, and Gujarat have notified IR Code Rules; Maharashtra, Kerala, and several other states are at draft stage. The MoLE Additional FAQs of 16 March 2026 carry the current authoritative interpretive position on the transitional rule-making, directing employers to apply saved older-Act notifications and the still-draft Central Rules until final Rules notify under the Code itself.

Re-Skilling Fund collection mechanics remain in the held-back layer pending separate notification under Section 83 read with the Central Rules. The substantive liability on every retrenchment is live from 21 November 2025; the operational machinery for collection, reconciliation, and disbursement is what awaits notification. Labour Code Compliance Calendar threads the IR Code's event-triggered obligations (the 21-day notice under Section 40, the 5-day strike-and-lockout reporting under Section 62(6), the 45-day Re-Skilling Fund credit under Section 83(3)) onto the compliance calendar across the year.

Five Mistakes

Five mistakes that recur on inspection

Five mistakes recur in compliance reviews of mid-sized payrolls under the IR Code.

Counting all employees when the threshold is in workers is the first. The 20-worker GRC trigger under Section 4, the 100-worker Works Committee trigger under Section 3, the 50-worker chapter IX floor for lay-off compensation under Section 67, and the 300-worker Standing Orders and chapter X triggers under Section 28(1) and chapter X all run on the worker count, not the employee count. A spreadsheet that pulls a single payroll count and applies it across the IR Code thresholds silently miscalculates. Apply the distinction: managers and administrators come off regardless of pay; supervisors come off where wages exceed ₹18,000 per month.

Treating the 300-worker chapter X regime as a small change from chapter IX is the second. Prior government permission is structurally different from notice. The commercial case for any lay-off, retrenchment, or closure has to absorb the time and uncertainty of a permission process before a chapter X action is feasible. Companies sitting in the 280-to-310 worker band run two playbooks in parallel: a chapter IX playbook for action on a date when the worker count is below 300, and a chapter X playbook for action on a date when it is at or above 300.

Retrenching without the Section 83 contribution to the Re-Skilling Fund is the third. The collection machinery is in the held-back layer, but the accrual is live. Book the liability at the retrenchment date; ring-fence the cash; pay against accumulated events when the collection notification lands.

Changing wages, hours, or shifts without the 21-day notice under Section 40 is the fourth. Most salary restructuring sits inside item 1 or item 3 of the Third Schedule, most shift changes sit inside item 6, and most leave-policy changes sit inside item 5. The notice is a precondition, not a formality. A change implemented without the notice is not validly in force, and the audit trail of the notice (date, mode of delivery, language versions, worker acknowledgements) sits in the worker file against an Inspector's request to verify.

Waiting to recognise a sole negotiating union under Section 14(3) is the fifth. Where a registered union commands 51% or more of muster-roll support, recognition is not discretionary; the bare-text mechanism is automatic. Earlier recognition, with the verification documented and the appropriate Government's authority intimated, makes subsequent negotiations and any Standing Orders process cleaner when the establishment crosses 300 workers.

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The IR Code governs the collective relationship. The OSH Code governs the workplace itself: registration, appointment letters, annual health checks, welfare facilities along the headcount ladder, leave, women working outside daylight hours, contract labour, inter-state migrants, and the three notification obligations every employer owes when something goes wrong. OSH Code 2020 Compliance Guide walks through the largest of the four Codes.

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