What does the Industrial Relations Code, 2020 change?
The Industrial Relations Code, 2020 replaces the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946 and the Industrial Disputes Act, 1947. It covers trade unions, conditions of employment, layoffs and retrenchment, and disputes. It also gives fixed-term employment a legal footing.
At a glance
- Fixed-term employees get the same wages and benefits as permanent staff doing similar work.
- Standing orders apply to industrial establishments with 300 or more workers.
- Grievance Redressal Committees are required where 20 or more workers are employed.
- Retrenchment needs notice and compensation; larger factories, mines and plantations need government permission.
Fixed-term employment
The Code allows direct, time-bound contracts with parity in wages and benefits, and gratuity eligibility after one year. See fixed-term employment.
Standing orders and grievance committees
The Ministry's handbook says that standing orders apply to industrial establishments with 300 or more workers, and employers can adopt the model standing orders and inform the Certifying Officer. An industrial establishment with 20 or more workers must set up a Grievance Redressal Committee with equal employer and worker representatives, at least proportionate representation of women, and a decision cycle of 30 days from receiving an application.
Layoff, retrenchment and closure
| Item | What the handbook states |
|---|---|
| Layoff compensation | 50% of basic wages plus dearness allowance |
| Retrenchment notice | One month for establishments with 50 to 299 workers; three months for 300 or more |
| Retrenchment compensation | 15 days' average pay for each completed year of service |
| Re-skilling fund | 15 days' wages per retrenched worker, paid into the fund |
| Closure | 60 days' notice (50 to 299 workers) or application 90 days ahead (300 or more) |
Establishments with 300 or more workers need prior permission from the appropriate government for layoff, retrenchment or closure.
Trade unions and strikes
A union with 51% or more of the workers on the muster roll is recognised as the negotiating union; otherwise a negotiating council forms from unions with at least 20% support. The Ministry's summary lists a 14-day notice for strikes and lockouts, and widens "strike" to include mass casual leave.
Who is a "worker"?
The Code excludes persons employed mainly in managerial or administrative roles, and supervisors earning above the amount notified (currently stated as 18,000 rupees per month in the Ministry's materials). That boundary decides which protections apply, so check your own role.
For employers: Industrial Relations Code, 2020
Review standing orders, grievance mechanisms and exit processes. Read what changes for employers.
Sources
- Ministry of Labour and Employment, Compliance Handbook for Employers under the Four Labour Codes (Central Government sphere), https://www.labour.gov.in/static/uploads/2026/02/83978455025732b99b0165def80ab171.pdf, checked 2026-10-31
- PIB, India's Labour Reforms: Simplification, Security, and Sustainable Growth (21 Nov 2025), https://www.pib.gov.in/PressReleasePage.aspx?PRID=2192524®=3&lang=2, checked 2026-10-31
- Ministry of Labour and Employment, FAQs on Labour Codes (Dec 2025), https://www.labour.gov.in/static/uploads/2026/01/de4758d5bfeffc456d7de97a801891b0.pdf, checked 2026-10-31
This is general information, not legal, tax or immigration advice. Rules change and your situation may differ. Consult a licensed attorney or qualified adviser.