Key Provisions: The Industrial Relations Code, 2020 consolidates and reforms provisions relating to industrial disputes, strikes, lockouts, and the employment termination process.
- Layoffs, Retrenchment, and Closure:
- For companies employing up to 300 workers (previously 100 workers under the Industrial Disputes Act, 1947), employers no longer require government permission for layoffs, retrenchment, or closure of establishments. This threshold is expected to ease the financial burden on smaller firms and provide them flexibility in managing labour costs.
- Workers who are retrenched must be compensated with 15 days’ wages for every year of service completed.
- Strikes and Lockouts:
- Workers must now give a 60-day notice before striking. Strikes during conciliation or arbitration proceedings are illegal.
- For industries classified as “public utilities,” stricter strike regulations apply, ensuring that businesses providing essential services continue to operate without disruption.
Impact on Businesses:
- Greater Flexibility for Smaller Firms: Companies with fewer than 300 workers can now implement layoffs or closure decisions without waiting for bureaucratic approvals, improving efficiency.
- Predictability in Strikes: The extended notice period for strikes allows businesses to resolve issues through negotiation or prepare for potential disruptions, reducing sudden losses.
- Retrenchment Compensation: While the code gives more freedom to smaller firms, businesses must ensure they meet retrenchment compensation obligations to avoid legal disputes.
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It is important to note that labour laws can be complex and subject to change. Please consult with lawyer to ensure that you are complying with all applicable laws and regulations.