UPSC PRELIMS 2020: Industrial Relations Code Bill

Industrial Relations Code Bill

Topic: Industrial Relations Code Bill

Topic in Syllabus: Indian Economy

Industrial Relations Code Bill


In light of various steps taken by government to facilitate Ease of Doing Business, Labour reforms and revised labour codes are a step forward. They not only seek to streamline formal processes but also incentivise investments.

Industrial relations code (IRC) Bill:

Restrictive labor regulations in India is associated with a 35% increase in firms’ labor costs, according to a study. India ranks 103 out of 141 countries on the competitiveness of its labor market, according to the World Economic Forum. 

Under these circumstances, IRC is one of the four labour codes which is pushed through to reform India’s archaic labour laws and amalgamate 44 central laws into four broad legislations.

The draft code on IR has been prepared after amalgamating the relevant provisions of following three Central Labour Acts:

  • The Trade Unions Act, 1926
  • The Industrial Employment (Standing Orders) Act, 1946
  • The Industrial Disputes Act, 1947

The bill has the following provisions:

  • Setting up of two-member tribunal so that important cases will be adjudicated jointly and the rest by a single member resulting in speedier disposal of cases.
  • To impart flexibility to the employee exit provisions,the threshold for prior approval of appropriate Government has been kept unchanged at 100 employees.
  • A provision for changing ‘such number of employees’ through notification has been added.
  • Terminating a worker at the end of the fixed term would not be retrenchment.
  • The re-skilling fund is to be utilised for crediting to workers in a manner to be prescribed.
  • Vesting of powers with the government officers for adjudication of disputes involving penalty as fines thereby lessening the burden on tribunal.
  • The definition of a strike is being amended to include ‘mass casual leave’ in case of a sudden protest and makes it mandatory for a notice of 14 days for strikes and lockouts in any establishment.
  • The bill includes fixed-term employment as a category of employment in classification of workers.
  • It introduces a feature of ‘recognition of negotiating union’under which a trade union will be recognized as sole ‘negotiating union’ if it has the support of 75% or more of the workers on the rolls of an establishment.
  • If it will be tough for any one group to manage 75% support, a negotiating council will be constituted.
  • The fixed-term employees will get all statutory benefits on a par with the regular employees who are doing the work of similar nature.
  • The amendments to the labor law would be limited to new hires in order to defuse opposition from the unions.

Rajasthan model of labour reforms:

  • In 2014, Rajasthan was the first state that introduced labour reforms in the major Acts. 
  • The major reforms undertaken by Rajasthan included the amendments to the Industrial Dispute Act, 1947, the Factories Act, 1948, the Contract Labour (Regulation & Abolition) Act, 1970 and the Apprentices Act, 1961.
  • To reduce trade union influence, the state has amended laws to increase the minimum membership requirement to form a union as 30% of total workmen at an establishment from 15% earlier.
  • No prior government nod is required for companies employing up to 300 people for firing and laying off workers or shutting down units (earlier limit was 100 workers).
  • A worker can raise an objection about wrongful termination only within three years (there was no deadline earlier).

As per 2014-15 Economic Survey, Rajasthan performed much better in terms of factory output, growth in the number of large factories and jobs creation than the rest of India.

At present, the growth rate in Rajasthan is a little less than double for the rest of India. 

Sample Question:

According to the Industrial Disputes Act, 1947, the word ‘strike’ throws light on which of the following factors?
a) It is referred to as stoppage of work by a group of workers employed in a particular industry
b) It includes die refusal of a number of employees to continue work under their employer
c) Neither of them
d) Both of them
Ans. D