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IRC an Unnecessary Law on Labor Negotiations



The Industrial Relations Code has unnecessarily sought to legislate on “matters” for negotiations between the negotiating union/council and the employer. In the concluding part of the two-part series on the new labour reforms code, K.R. SHYAM SUNDAR explains how the code has made matters worse by allowing states to make their own rules on the subject.


THE Industrial Relations Code (IRC) has unnecessarily sought to legislate on “matters” for negotiations between negotiating union/negotiating council (NU/NC) and employers [Section 14(1)]. Like in the past, it should have been left to the parties to determine depending on the empirical realities facing them at various points of time.

Worse, the code left the description of “matters” to the rulemaking process. Thus, we have the Central rules providing for nine specific matters and a miscellaneous one. Consequently, state governments have come out with elaborate details.

Central sphere: The Centre has included the following as “matters” for negotiation,  viz.

  1. classification of grades and categories of workers;
  2. order passed by an employer under the standing orders applicable in the industrial establishment;
  3. wages of the workers, including their wage period, dearness allowance, bonus, increment, customary concession or privileges, compensatory and other allowances;
  4. hours of work and rest days, number of working days in a week, rest intervals, working of shifts;
  5. leave with wages and holidays;
  6. promotion and transfer policy and disciplinary procedures;
  7. quarter allotment policy for workers;
  8. safety, health and working conditions related standards;
  9. such other matters pertaining to conditions of service, terms of employment which are not covered in the foregoing clauses and
  10. any other matter which is agreed between the employer of the industrial establishment and negotiating union or council.

Bihar: The NU/NC can negotiate on “issues related to terms of employment or conditions of workers”.

Gujarat: It has repeated the definition of ‘industrial dispute’ in the Industrial Disputes Act, 1947: “… matters pertaining to any dispute or difference between employers and workers which is connected with the employment or non-employment or the terms of employment or with the conditions of labour, … includes any dispute … arising out of discharge, dismissal, retrenchment or termination such worker.”

Jharkhand: The matters include (i) condition of service, (ii) wages, (iii) working hours, (iv) duty shift, (v) bonus, (vi) leave (vii) safety, (viii) welfare, (ix) promotion, (x) increment and (xi) other matters directly or indirectly connected with workers of that establishment.

Karnataka: The NU/NC can negotiate matters such as (i) discharge or dismissal of individual workmen (sic); (ii) wages, including the period and mode of payment; (iii) compensatory and other allowances, (iv) hours of work and rest intervals, (v) leave with wages and holidays, (vi) shift working, (vii) disciplinary procedures and (viii) any other matter that might be mutually agreed upon by the parties in the standing orders.

Madhya Pradesh: The matters include (i) matters contained in the Third Schedule to IRC (1. Wages, including the period and mode of payment.

2. Contribution paid or payable by the employer to any provident fund or pension fund or for the benefit of the workers under any law for the time being in force.

3. Compensatory and other allowances.

4. Hours of work and rest intervals.

5. Leave with wages and holidays.

6. Starting, alteration or discontinuance of shift working otherwise than in accordance with standing orders.

7. Classification by grades.

8. Withdrawal of any customary concession or privilege or change in usage.

9. Introduction of new rules of discipline or alteration of existing rules except in so far as they are provided in standing orders.

10. Rationalisation, standardisation or improvement of plant or technique is likely to lead to retrenchment of workers.

11. Any increase or reduction (other than casual) in the number of persons employed); (ii) discharge or dismissal or termination; (iii) strike or lockout and (iv) lay-off, retrenchment of workers and closures.

Odisha: The “matters” include, “(a) Classification by grades and category;

(b) Order passed by an employer under the standing order;

(c) Wages, including the period and mode of payment, DA, Bonus, Overtime, Increment, customary concession or privileges, compensatory and other allowances etc.;

(d) For the betterment of social security and welfare schemes;

(e) Hours of work, rest days, rest intervals, shift working;

(f) Leave with wages, holidays;

(g) Retrenchment, discharge, dismissal, reinstatement, grant of relief to the dismissed worker;

(h) Promotion and transfer policy, disciplinary procedure and any amendment in the existing service rules;

(i) Formulation of quarter allotment policy;

(j) Rationalisation, standardisation, safety, improvement of plant or introduction of new technology;

(k) Rationalisation of the workforce employed in any occupation, process or department and

(l) Any other matter pertaining to conditions of service, terms of employment and working conditions, which are not covered in the above list”.

Uttarakhand: The NU/NC can negotiate on “all matters pertaining to service conditions and charter of demands of Workers (sic) that have been signed by, at least, 20% of the total workforce if there is no registered Trade Union (sic) or by the executive committee of a registered Trade Union (sic)”.

Uttar Pradesh: The NU/NU “is authorised to deal with any matter of industrial dispute affecting more than one worker in accordance with the provisions of the code”. So, it excludes “individual disputes” like promotion, transfer, dismissal or discharge or retrenchment or termination of worker among others and includes only “collective matters”.  It is not clear which provisions in the IRC deal with “matters” for negotiation?

While Punjab does not have a clause on “matters” for negotiation, in the case of other states, there is a disturbing variation even accounting for the fact that they have the freedom to determine the matters as they want.

Lawmakers have done a tremendous disservice to the conduct of industrial relations in general and collective institutions like collective bargaining, strikes and lockouts by attempting to “restrict the scope of collective bargaining”.  

The entire discourse of labour law reforms was premised on the argument that labour laws, being excessive, introduced “rigidities” on the free working of market forces and substantially constricted the employer’s freedom. The IRC has done the same. Even with the escape clause of “other matters”, there would surely be scope for litigation by either party to negotiations as being or out of the legal scope of negotiations.

Industrial relations will worsen in such a litigation context.  The matters are made worse by rather brief and vague legal specifications as in the case of UP or Bihar.


Bihar [16(2)] and Uttarakhand [16(7)] rules stipulate that the employer shall provide “reasonable/sufficient space for negotiation” to NU/NC.  UP rules mention that the facilities for NU/NC will be notified by the government by a general or special order (Rule 22). Gujarat rules stipulate that the facilities to NU/NC shall be mutually decided between employers and recognised unions (Rule 64).

Table 1 Facilities to be offered by the employer to NU/NC: A comparison

FacilitiesCentralSphereJharkhandKarnatakaMadhya Pradesh
Notice boardXXXX
Venue and necessary facilities for holding discussions between employer and NU/NCXXXX
Venue and necessary facilities for holding discussions amongst the members/employeesXXXX
Facility for the entrance of the office-bearers in the industrial establishment for ascertaining the matters relating to working conditions of the workersXXNONO
Check-off facilityXNONONO
Treating on the duty of the employed office bearers of NU/NC when their office bearers hold meetings or discuss with the employerXNONONO
Attend conciliation, arbitration or adjudication cases (on special leave)NONONONO
An employer employing 300 or more workers shall provide office accommodation with necessary facilitiesXX*NONO
Collection of subscriptions from members on the premisesNONOXX

Note*Minimum space with required facilities for office (no employment threshold).

Karnataka and Madhya Pradesh provide these facilities with several attached conditions. It becomes difficult to distinguish between “facilities” and “rights”. In fact, Madhya Pradesh treats the discussions with their members and the employers by NU/NC as “rights”. It would be correct to term them as “rights and facilities”.

In fact, the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971, specifies the “rights” of both recognised (unrecognised unions also) and cancellation of recognition and suspension of rights while the Code of Discipline mentions only the former.

It is a matter of grave concern that Union lawmakers have entirely ignored a rich body of regional labour laws and the Code of Discipline concerning trade unions.

While it is perfectly feasible, even permissible, for differences to exist in the rules made by state governments, lack of clarity and inadequacies are impermissible. The preceding analyses have clearly demonstrated sloppy, inadequate, vague and opaque rules made by the state governments. 

Poor code will lead to more litigation

The Central government drafted an inadequate and incompetent code despite taking six years since the first draft of the IRC (announced in April 2015) and some excellent recommendations made by the Parliamentary Standing Committee. It left substantive aspects relating to trade union recognition (by the employers and the government), matters for negotiation, rights (wrongly termed as “facilities” in the code) of the recognised unions and the objects for which general and political funds can be spent by registered unions to rulemaking.

The poor code is the result of this ‘original blunder’. A virtually deserted Parliament passed the law with limited discussion and debate as a weak Opposition abandoned its Parliamentary responsibilities. No wonder Chief Justice of India NV Ramana lamented the lack of quality debates in Parliament a few days ago compared to the debates on the Industrial Disputes Act.

Further, such a poor law-making process will increase litigation and the burden on the judicial system. It is relevant to note that the IRC has abolished the labour courts and designed a complex adjudicatory system by industrial tribunals in its place. Further, trade union disputes will also be adjudicated by them (which in the erstwhile Trade Unions Act, 1926, were settled in civil courts).

The rules, characterised by shortcomings and inadequacies, make the IRC appear worst. The rules will also complicate matters for trade unions operating in industrial establishments in multiple states and regional, sectoral and national collective bargaining as “facilities” and “matters” for negotiation differ across the states.

The substantial differences and inadequacies in the rules could have been avoided had the Centre adopted strategies to coordinate the regional rulemaking processes—nor it is keen on reviving tripartite consultations.

The legislative vacuum seems to be helping the political parties (either they are too weak to protest or important Assembly elections are around the corner), employers (given the slow economic growth and cost management) and trade unions (as they do not seem to have any concrete and meaningful strategy to confront the State).

This article first appeared in The Leaflet titled IRC “An unnecessary law on labour negotiations” on August 24, 2021.

About the Author

K R Shyam Sundar

Dr K. R. Shyam Sundar is Professor, HRM Area, XLRI, Xavier School of Management, Jamshedpur. The views expressed are personal.

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