The Industrial Relations Code, 2020

Posted 23 Dec 2025

Updated 26 Dec 2025

2 min read

Incorporates three laws relating to dispute resolution, industrial relations, etc.

Aim: To simplify laws related to trade unions, conditions of employment in industrial establishment or undertaking, investigation and settlement of industrial disputes.
Key provisions
- Trade Unions: Now requires 51% membership to be recognised as the sole negotiating union, streamlining the negotiation process.
  - In case of more than 1 trade union, negotiating council will be formed with representatives of unions having 20 % of workers as members.
- Fixed-Term Employment (FTE): Explicitly institutionalises FTE, intended to reduce excessive contractualisation and offers cost efficiency to employers.
- Expanded Worker Definition: Covers sales promotion staff, journalists, and supervisory employees earning up to ₹18,000/month.
- Higher Threshold for Lay-off/Retrenchment/Closure: Approval limit raised from 100 to 300 workers; States may enhance the limit further.
- Broader Definition of Industry: Includes all systematic employer-employee activities, regardless of profit or capital.

Merits	Demerits
Boost skills: eg. Re-skilling Fund, in which employers pays 15 days' wages for every worker retrenched for retraining them. Simplified Dispute Resolution and Grievance Handling- The Codes provide for establishing Internal Grievance Redressal Committees (IGRCs) for establishments employing 20 or more workers	A higher threshold for removal: It can lead to a hire and fire policy. Permanent temporariness: FTEs can replace permanent employment with short-term contracts. Weakening collective bargaining strength of workers: 51% threshold risks marginalising smaller unions and centralizing bargaining power.