The Industrial Relations Code, 2020 is one of India’s four major Labour Codes introduced to simplify and consolidate the legal framework governing trade unions, industrial disputes, standing orders, strikes, retrenchment and worker-employer relations.

The Code received Presidential assent in September 2020 and was brought into force from 21 November 2025. The Ministry of Labour & Employment subsequently notified the Industrial Relations (Central) Rules, 2026 on 8 May 2026 for establishments where the Central Government is the appropriate Government.

For employers, HR teams, compliance professionals, trade unions and industrial establishments, the Industrial Relations Code creates a unified framework for managing employee relations, workforce restructuring, industrial disputes and workplace governance.

What is the Industrial Relations Code, 2020?

The Industrial Relations Code, 2020 consolidates three major Central labour laws dealing with industrial relations:

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

The objective is to streamline industrial-relations compliance while establishing clearer procedures for trade-union recognition, standing orders, industrial disputes, strikes, layoffs, retrenchment and closure.

Industrial Relations Code 2020 Effective Date

The Industrial Relations Code, 2020 came into force on:

21 November 2025

The Central Government issued a Gazette notification appointing this date for commencement of the Code. The Government simultaneously implemented all four Labour Codes from the same date.

The Industrial Relations (Central) Rules, 2026 were subsequently notified on 8 May 2026 and came into force on the date of their publication.

Employers should also identify whether Central or State rules apply to their establishment based on the appropriate Government.

Objectives of the Industrial Relations Code 2020

The key objectives of the Code include:

• Promoting harmonious industrial relations
• Simplifying trade-union registration and recognition
• Establishing structured grievance-redressal mechanisms
• Providing a framework for standing orders
• Creating clearer procedures for industrial disputes
• Regulating strikes and lock-outs
• Standardising retrenchment, lay-off and closure requirements
• Supporting workers affected by retrenchment through a reskilling fund
• Reducing overlapping compliance requirements

Key Features of the Industrial Relations Code 2020

1. Recognition of Negotiating Union

One of the important features of the Industrial Relations Code is formal recognition of a negotiating union or negotiating council.

Where multiple trade unions operate within an industrial establishment, the Code provides a framework for identifying the union that will negotiate with the employer.

Where a registered trade union has the prescribed majority support, it may be recognised as the sole negotiating union.

Where no union meets the required threshold, a negotiating council may be constituted in accordance with the Code.

This helps create a structured mechanism for collective bargaining between employers and workers.

2. Negotiating Council

Where more than one registered trade union exists and no single union qualifies as the sole negotiating union, the employer may be required to establish a negotiating council.

The council represents qualifying trade unions for discussions relating to:

• Working conditions
• Employment conditions
• Wage-related issues
• Workplace policies
• Employee benefits
• Industrial disputes
• Collective agreements

This structure is intended to reduce uncertainty regarding who is authorised to negotiate on behalf of workers.

3. Grievance Redressal Committee

Industrial establishments employing the prescribed number of workers are required to constitute a Grievance Redressal Committee.

The committee provides an internal mechanism through which employees can raise workplace grievances before disputes escalate.

Typical grievances may relate to:

• Employment conditions
• Workplace treatment
• Transfers
• Leave
• Disciplinary action
• Working conditions
• Service-related matters

A properly functioning grievance mechanism can significantly reduce industrial disputes.

4. Standing Orders

Standing orders define the employment conditions applicable to workers in an industrial establishment.

They may cover matters such as:

• Classification of workers
• Attendance requirements
• Working hours
• Shift working
• Leave
• Entry and exit requirements
• Misconduct
• Disciplinary proceedings
• Suspension
• Termination
• Grievance procedures

Under the Industrial Relations Code, standing-order provisions apply to industrial establishments meeting the statutory worker threshold.

Employers should review their existing standing orders and HR policies to ensure consistency with the Code and applicable rules.

5. Model Standing Orders

The Government may prescribe Model Standing Orders for different sectors or categories of industrial establishments.

Employers can adopt the applicable model provisions or prepare their own standing orders in compliance with statutory requirements.

Where an establishment prepares customised standing orders, these generally need to follow the prescribed certification process.

6. Fixed-Term Employment

The Code formally recognises fixed-term employment.

A fixed-term employee is engaged under a written contract for a specified period.

Fixed-term employees are generally entitled to statutory benefits proportionate to their period of service in accordance with applicable provisions.

For employers, fixed-term employment provides a legally structured mechanism for engaging employees for:

• Specific projects
• Seasonal requirements
• Temporary capacity expansion
• Time-bound assignments
• Business requirements of defined duration

Employers should maintain clear written employment terms to avoid disputes regarding tenure and benefits.

7. Notice Requirements for Strikes

The Industrial Relations Code introduces a structured notice requirement for strikes.

Workers cannot generally commence a strike without giving the prescribed notice within the statutory time period.

The Code also restricts strikes during certain periods, including where conciliation or adjudication proceedings are pending.

Employers and trade unions should therefore understand the statutory conditions before initiating or responding to industrial action.

8. Rules Relating to Lock-outs

Similar statutory requirements apply to employer-initiated lock-outs.

Employers must follow the prescribed notice and procedural requirements before declaring a lock-out.

Failure to follow statutory requirements may result in the lock-out being treated as illegal.

9. Industrial Dispute Resolution

The Code establishes mechanisms for handling industrial disputes through bodies and processes such as:

• Conciliation Officers
• Industrial Tribunals
• National Industrial Tribunal
• Negotiation mechanisms
• Grievance procedures

The objective is to provide a more structured and timely dispute-resolution framework.

10. Industrial Tribunal

The Industrial Relations Code provides for Industrial Tribunals to adjudicate industrial disputes.

Tribunals may hear disputes involving matters such as:

• Termination
• Dismissal
• Retrenchment
• Wage-related disputes
• Working conditions
• Service conditions
• Industrial-relations issues

Employers should maintain comprehensive documentation because employment decisions may need to be defended before statutory authorities or tribunals.

11. Lay-off

Lay-off generally refers to an employer’s inability or failure to provide employment to a worker due to specified circumstances while the employment relationship continues.

Possible reasons can include:

• Shortage of raw materials
• Power shortage
• Machinery breakdown
• Natural calamity
• Accumulation of stock
• Other legally recognised reasons

Applicable establishments must comply with compensation and procedural requirements under the Code.

12. Retrenchment

Retrenchment generally involves termination of a worker’s service by the employer for reasons other than certain statutory exclusions.

Employers considering retrenchment should review requirements relating to:

• Notice
• Notice pay
• Retrenchment compensation
• Seniority
• Re-employment rights
• Government permission where applicable
• Reskilling contribution
• Statutory records

Improper retrenchment can expose an establishment to significant industrial-relations disputes.

13. Last-In-First-Out Principle

The Industrial Relations Code retains the principle commonly known as Last-In-First-Out (LIFO) for retrenchment.

Where workers belong to the same category, the employer would generally retrench the worker who was the last person employed in that category unless reasons are recorded for departing from this principle.

This makes accurate seniority records particularly important.

14. Re-employment of Retrenched Workers

Where an employer later proposes to employ workers again after retrenchment, retrenched workers may have statutory preference for re-employment, subject to applicable conditions.

Employers should therefore maintain records of:

• Retrenched workers
• Dates of retrenchment
• Employee categories
• Contact information
• Re-employment offers

15. Reskilling Fund

A significant feature of the Industrial Relations Code is the creation of a Worker Re-skilling Fund.

The fund is intended to support workers who lose employment due to retrenchment.

The Government has specifically highlighted the reskilling fund as an important worker-protection measure under the Industrial Relations Code.

Employers undertaking retrenchment must consider the applicable contribution requirements.

Prior Government Permission for Lay-off, Retrenchment and Closure

Certain industrial establishments meeting the statutory worker threshold may be required to obtain prior permission from the appropriate Government before carrying out:

• Lay-off
• Retrenchment
• Closure

The Industrial Relations Code provides a higher statutory threshold than the framework historically applicable under the Industrial Disputes Act, subject to the Code, rules and any notifications issued by the appropriate Government.

Employers planning major workforce restructuring should confirm the applicable threshold before proceeding.

Closure of an Industrial Establishment

Closure refers to the permanent closing of a place of employment or part of an industrial establishment.

Depending on employee strength and the applicable statutory provisions, the employer may be required to:

• Give advance notice
• Apply for government permission
• Pay compensation
• Settle employee dues
• Maintain statutory documentation
• Notify relevant authorities

Closure should therefore be managed as both a commercial and statutory compliance process.

Worker Classification Under the Industrial Relations Code

Correct worker classification is important because several rights and obligations depend on whether an individual falls within the statutory definition of a worker.

Employers should carefully review:

• Nature of duties
• Supervisory functions
• Managerial responsibilities
• Employment terms
• Job designation
• Actual work performed

The job title alone may not always determine statutory coverage.

Trade Union Registration

The Industrial Relations Code continues the legal framework for registration of trade unions.

Registered trade unions receive statutory recognition and may represent workers in industrial-relations matters subject to the Code.

Employers should maintain accurate information regarding recognised unions and authorised representatives.

Works Committee

Where applicable, the appropriate Government may require an industrial establishment to constitute a Works Committee.

The purpose of the committee is to promote cooperation and good relations between employers and workers.

It can help address workplace issues before they develop into larger industrial disputes.

Change in Conditions of Service

Employers may be required to give prescribed notice before changing certain service conditions affecting workers.

These could involve matters such as:

• Wages
• Working hours
• Shift arrangements
• Leave
• Classification
• Work practices
• Other specified employment conditions

HR teams should therefore review statutory notice requirements before implementing major changes in employment conditions.

Employer Compliance Requirements Under the Industrial Relations Code

Employers should establish a structured industrial-relations compliance process covering:

• Employee and worker classification
• Trade-union information
• Negotiating-union recognition
• Negotiating councils
• Grievance Redressal Committees
• Standing Orders
• Fixed-term employment contracts
• Disciplinary proceedings
• Industrial dispute documentation
• Strike and lock-out notices
• Lay-off procedures
• Retrenchment procedures
• Retrenchment compensation
• Reskilling Fund obligations
• Closure procedures
• Employee seniority records
• Re-employment requirements
• Statutory notices and registers

Industrial Relations Code Compliance Checklist

Employers can use the following checklist:

• Verify whether the Industrial Relations Code applies to the establishment
• Identify the appropriate Government
• Review applicable Central or State Rules
• Identify employees who qualify as workers
• Review existing employment contracts
• Verify fixed-term employment arrangements
• Maintain worker seniority lists
• Review standing orders
• Adopt or certify applicable standing orders
• Constitute required committees
• Verify registered trade unions
• Identify the negotiating union or negotiating council
• Maintain grievance-redressal procedures
• Document disciplinary proceedings
• Track industrial disputes
• Verify strike and lock-out notices
• Follow statutory lay-off procedures
• Follow retrenchment requirements
• Calculate retrenchment compensation correctly
• Comply with Worker Re-skilling Fund requirements
• Obtain Government permission where required
• Maintain closure documentation
• Monitor Labour Department and Gazette notifications

Why Industrial Relations Compliance Is Important

Industrial relations directly affect workforce stability and business continuity.

Weak industrial-relations processes can result in:

• Employee disputes
• Trade-union conflicts
• Illegal disciplinary action
• Retrenchment disputes
• Work stoppages
• Strikes
• Legal proceedings
• Compensation claims
• Regulatory penalties
• Business disruption

A structured compliance process helps employers manage workforce-related decisions consistently while maintaining appropriate legal documentation.

Impact of the Industrial Relations Code on HR Teams

The Industrial Relations Code requires HR departments to integrate statutory compliance into everyday workforce management.

HR teams should particularly review:

Employment Policies

Employment rules should align with standing orders and statutory requirements.

Worker Classification

Worker, supervisory and managerial categories should be accurately identified.

Fixed-Term Employment

Contracts should clearly document duration, conditions and applicable benefits.

Disciplinary Proceedings

Domestic enquiries and disciplinary procedures should be properly documented.

Retrenchment

Seniority, notice, compensation and statutory permissions must be reviewed before retrenchment.

Trade Union Relations

Employers should maintain transparent processes for recognition and negotiation.

Employee Grievances

Internal grievance mechanisms should operate effectively and maintain proper records.

How FACILE Can Help With Industrial Relations Compliance

FACILE ONE can help organisations manage industrial-relations compliance through a structured digital compliance framework.

Businesses can use FACILE to support:

• Labour-law compliance tracking
• Statutory task monitoring
• Standing-order documentation
• Employee and establishment records
• Compliance calendar
• Due-date reminders
• Legal-document management
• Notice and licence tracking
• Compliance observations
• Multi-location compliance monitoring
• Contractor and vendor compliance
• Compliance dashboards and reports

For organisations operating across multiple States, FACILE can help provide a centralised view of applicable labour-law requirements and regulatory updates.

Why FACILE ONE?

Industrial-relations compliance involves multiple stakeholders, documents, timelines and legal requirements.

FACILE ONE helps organisations bring these requirements into a centralised compliance framework.

Key capabilities include:

• Centralised statutory compliance
• Labour-law update monitoring
• Compliance calendar
• Document management
• Task tracking
• Compliance observations
• Legal and statutory records
• Multi-state compliance monitoring
• Contractor compliance
• Compliance dashboards
• Audit trails and reports

This enables management, HR and compliance teams to maintain better visibility over their labour-law responsibilities.

Stay Connected. Stay Compliant.

The Industrial Relations Code, 2020 represents a major change in India’s industrial-relations framework.

With the Code effective from 21 November 2025 and the Industrial Relations (Central) Rules, 2026 notified on 8 May 2026, employers should now review their standing orders, workforce policies, trade-union arrangements, grievance mechanisms, retrenchment procedures and industrial-dispute processes.

Because requirements can differ depending on the appropriate Government and State-level rules, organisations operating in multiple States should continuously monitor applicable notifications and Gazette updates.

Frequently Asked Questions – Industrial Relations Code 2020

1. What is the Industrial Relations Code, 2020?

The Industrial Relations Code, 2020 is a Central labour law that consolidates the legal framework relating to trade unions, standing orders, industrial disputes, strikes, lock-outs, lay-offs, retrenchment and closure.

2. When did the Industrial Relations Code 2020 come into force?

The Code came into force on 21 November 2025.

3. When were the Industrial Relations Central Rules 2026 notified?

The Industrial Relations (Central) Rules, 2026 were notified on 8 May 2026 and came into force on publication.

4. Which laws were consolidated under the Industrial Relations Code?

The Code consolidates the:

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

5. What is a negotiating union?

A negotiating union is a registered trade union recognised to negotiate with an employer on behalf of workers in an industrial establishment in accordance with the statutory criteria.

6. What is a negotiating council?

Where no single trade union meets the required threshold to become the sole negotiating union, qualifying unions may be represented through a negotiating council.

7. What are Standing Orders?

Standing Orders are formally defined conditions of employment covering matters such as worker classification, attendance, shifts, leave, misconduct, disciplinary procedures and termination.

8. What is fixed-term employment?

Fixed-term employment is employment under a written contract for a predetermined period. Eligible fixed-term employees are entitled to applicable statutory benefits in accordance with the Code.

9. What is a Grievance Redressal Committee?

A Grievance Redressal Committee is an internal mechanism constituted by applicable industrial establishments to address individual worker grievances.

10. Does the Industrial Relations Code regulate strikes?

Yes. The Code prescribes notice requirements and restrictions regarding when strikes may lawfully commence.

11. Does the Code regulate lock-outs?

Yes. Employers must also comply with prescribed notice and procedural requirements before initiating a lock-out.

12. What is retrenchment under the Industrial Relations Code?

Retrenchment generally refers to termination of a worker’s service by the employer for reasons other than specified statutory exclusions.

13. What is the LIFO principle?

LIFO means Last-In-First-Out. When retrenching workers within the same category, the worker most recently employed is generally retrenched first unless the employer records valid reasons for departing from the principle.

14. What is the Worker Re-skilling Fund?

The Worker Re-skilling Fund is intended to provide financial support for retrenched workers and help support their transition into new employment.

15. Is prior Government permission required for retrenchment?

Certain industrial establishments meeting the applicable statutory threshold may require prior permission from the appropriate Government before lay-off, retrenchment or closure.

16. What is an industrial dispute?

An industrial dispute generally concerns a disagreement connected with employment, non-employment, terms of employment or conditions of labour involving employers and workers or workers and workers, subject to the statutory definition.

17. Are State rules important under the Industrial Relations Code?

Yes. Employers must identify the appropriate Government and comply with applicable Central or State rules and notifications.

18. Can FACILE help manage Industrial Relations Code compliance?

Yes. FACILE ONE can support labour-law compliance tracking, statutory documents, compliance calendars, task monitoring, multi-state compliance, regulatory-update monitoring, observations and compliance reporting.