Benefits of IR Code, 2019 and why trade unions to protest against it?


The Government approved the IR Code, 2019 that proposes to retain the threshold of 100 employees to impart flexibility to firms for retrenchment, but it has a provision for changing ‘such number of employees’ through notification. IR Code proposes to amalgamate-

  1. The Trade Unions Act, 1926,
  2. The Industrial Employment (Standing Orders) Act, 1946, and
  3. The Industrial Disputes Act, 1947.

Important aspects of the Bill

  • The most important aspect of the Bill is that it presents the legal framework for ushering in the concept of ‘fixed-term employment’ through contract workers on a pan-India basis.
  • Currently, companies hire contract workers through contractors.
  • With the introduction of fixed-term employment, they will be able to hire workers directly under a fixed-term contract, with the flexibility to tweak the length of the contract based on the seasonality of the industry.
  • These workers will be treated on a par with regular workers during the tenure of the contract.
  • The move to include it in a central law will help in wider reach, and states are expected to follow similar applicability.

Changes in the Bill

  • The threshold required for government permission for retrenchment has been kept unchanged at 100 employees, as against the proposal for 300 employees in an earlier draft of the Bill, which was opposed by trade unions.
  • Instead, the government has now provided flexibility for changing the threshold through notification.
  • The rigidity of labour laws about laying off labour has often been cited by industry as the main reason limiting scalability and employment generation.
  • At present, any company having 100 workers or more has to seek government approval for retrenchment.
  • The provision of fixed-term employment, which helps in the flow of social security benefits to all workers along with making it easier for companies to hire and fire, in The Industrial Relations Code Bill.

Fixed Term Employment Workman

  • Earlier the government had included the category of ‘Fixed Term Employment Workman’ for all sectors in the Industrial Employment (Standing Orders) Act, 1946.
  • This was only applicable to ‘central sphere’ establishments, and the states did not follow suit.
  • Finance Minister said that workers under a fixed-term contract would be taken up depending upon the seasonality of the industry, but would be treated on a par with regular workers.

Trade Union’s Objection

Trade unions are planning to launch a nationwide agitation against the government move to empower itself to change the ceiling on employee count for a firm to retrench workers without prior approval through a notification, even as staffing firms lamented that the threshold is not raised.

AK Padmanabhan, Vice President of Centre of Indian Trade Unions comments, “Government will take no time in changing the threshold through notification as the intent is to take away all the rights of the workers in the name of simplification of labour laws.”

He also alleged that the codes are part of the government’s move towards massive privatisation and flawed economic policies that have already resulted in a severe slowdown in the economy.

According to Economic Times report, Trade unions plan to hold a nationwide strike on January 8 against proposed labour law changes through various codes as part of the government’s efforts to improve ease of doing business in the country and attract more private investments.

Amarjeet Kaur, general secretary of All India Trade Union Congress (AITUC), said the government’s move to “bulldoze” trade unions’ view will be resisted. “They are introducing changes which have always been opposed (by workers) without consulting us,” she said, rejecting the government’s claim that extensive stakeholder consultations were held on the approved IR Code.

RSS-affiliate Bhartiya Mazdoor Sangh (BMS), though, played down the provision for changing the worker threshold via simple notification. “It is merely a face-saver for the government as employers would have accused them of bowing down to the pressure of trade unions,” said Vrijesh Uppadhyay, general secretary of BMS.

BMS is of the view that changing rules at any stage, even though a notification, will require deliberations. “We will continue to oppose any change in the threshold,” Uppadhyay added.

Ref- Civilsdaily, Economic Times


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.