Industrial Relations Code 2020

The IR Code 2020 consolidates 3 central labour acts: Industrial Disputes Act 1947, Trade Unions Act 1926, and Industrial Employment (Standing Orders) Act 1946. It formalises fixed-term employment, raises standing orders threshold to 300 employees, and modernises dispute resolution.

Fixed-term employment is a formal employment category where an employee is hired for a defined period. Under the IR Code, fixed-term employees receive the same wages, allowances, and statutory benefits as permanent employees. They become eligible for gratuity after just 1 year of service.

The IR Code 2020 raised the threshold for mandatory standing orders from 100 to 300 employees. Establishments with fewer than 300 employees no longer need to publish formal standing orders, easing SME compliance significantly.

Under the IR Code, government permission for layoffs, retrenchment, and closure is required only for industrial establishments with 300 or more employees. Smaller establishments can proceed with layoffs following procedural rules without prior government approval.

The IR Code 2020 establishes a worker reskilling fund to support workers affected by retrenchment. Employers must contribute an amount equivalent to 15 days of last drawn wages of the retrenched worker into this fund, in addition to retrenchment compensation.