Union Cabinet approves the Industrial Relations Code Bill, 2019

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The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for introduction of the Industrial Relations Code, 2019 which is the third & the most contentious labour law amendments.

This code allows companies to hire workers on a fixed-term contract of any duration. The code has retained the threshold on the worker count at 100 for prior government approval before retrenchment, but it has a provision for changing ‘such number of employees’ through notification

Finance Minister Nirmala Sitharaman said after the cabinet meeting. “While this means workers can be hired seasonally for six months or a year it also means that all workers will be treated at par with regular workers for benefits.”

The bill is expected to be tabled in the ongoing winter session of the Parliament.

Salient Features

  • Setting up of two-member tribunal (in place of one member) introducing a concept that some of the important cases will be adjudicated jointly and the rest by a single member resulting in speedier disposal of cases.
  • To impart flexibility to the exit provisions (relating to retrenchment etc.), for which, the threshold for prior approval of appropriate Government has been kept unchanged at 100 employees, but added a provision for changing ‘such number of employees’ through notification.
  • The re-skilling fund is to be utilised for crediting to workers in the manner to be prescribed.
  • Definition of Fixed Term Employment and that it would not lead to any notice period and payment of compensation on retrenchment excluded.
  • Vesting of powers with the government officers for adjudication of disputes involving penalty as fines thereby lessening the burden on the tribunal.

The draft code on Industrial Relations has been prepared after amalgamating, simplifying and rationalizing the relevant provisions of following three Central Labour Acts:

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

The government has already allowed fixed-term employment across all sectors last year. It has now been codified, which means that once approved by Parliament it will become legislation to be abided by all. The labour ministry has decided to amalgamate 44 labour laws into four codes – on wages, industrial relations, social security, and safety, health and working conditions.


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