Dispute Resolution Under Industrial Relations Code, 2020: Conciliation, Arbitration, and Industrial Tribunals

Introduction

The Industrial Relations Code, 2020 represents a watershed moment in India’s labour law framework, consolidating three major legislations—the Trade Unions Act 1926, the Industrial Employment (Standing Orders) Act 1946, and the Industrial Disputes Act 1947—into a unified code.[1] This legislative consolidation seeks to streamline dispute resolution under the Industrial Relations Code, 2020 through enhanced conciliation, arbitration, and industrial tribunals while balancing the interests of employers and workers in an evolving economic landscape. The Code, passed by the Parliament in September 2020, introduces significant reforms to the adjudicatory and conciliatory frameworks that have governed industrial relations in India for over seven decades.

At the heart of the Industrial Relations Code lies a three-tier dispute resolution architecture designed to address conflicts at various stages before they escalate into protracted legal battles. This system comprises preventive mechanisms through bi-partite forums, conciliatory processes involving government-appointed officers, and adjudicatory bodies empowered to deliver binding awards. Understanding these mechanisms is crucial for employers, workers, trade unions, and legal practitioners navigating the complexities of industrial relations in contemporary India.

Understanding Industrial Disputes Under the Industrial Relations Code, 2020

The Industrial Relations Code defines an industrial dispute as any dispute or difference between employers and employers, between employers and workers, or between workers and workers, which is connected with employment, non-employment, terms of employment, or conditions of labour. Significantly, the Code expands this definition to include disputes relating to the discharge, dismissal, retrenchment, or termination of individual workers, thereby granting them direct access to dispute resolution forums without requiring collective representation.[2] This represents a departure from the previous regime where individual grievances required collective support to be recognized as industrial disputes.

The scope of what constitutes an “industry” under the Code has been shaped significantly by judicial interpretation, particularly the landmark Supreme Court judgment in Bangalore Water Supply and Sewerage Board v. A. Rajappa (AIR 1978 SC 548).[3] In this case, a seven-judge Constitution Bench established the “triple test” to determine whether an entity qualifies as an industry: there must be systematic activity, cooperation between employers and workers, and production or supply of goods or services to satisfy human needs. The Court held that the absence of profit motive or the philanthropic nature of an undertaking does not disqualify it from being classified as an industry. This expansive interpretation ensures that workers across diverse sectors, including governmental bodies providing essential services, educational institutions, and hospitals, are protected under industrial relations laws.

The Three-Tier Dispute Resolution Architecture under the Industrial Relations Code, 2020

Preventive Mechanisms: Bi-Partite Forums

The first tier of dispute resolution under the Industrial Relations Code, 2020 emphasizes prevention through internal mechanisms that encourage dialogue between employers and workers before conflicts escalate. The Code mandates the establishment of two critical bi-partite forums that serve as the first line of defense against industrial unrest.

Works Committees are required in industrial establishments employing one hundred or more workers. These committees consist of equal representation from employers and workers, with worker representatives chosen in consultation with registered trade unions where they exist. The primary duty of Works Committees is to promote measures for securing and preserving amicable relations between employers and workers, commenting on matters of common interest and endeavoring to compose material differences of opinion. This forum provides a structured platform for addressing concerns before they develop into formal disputes requiring external intervention.

Grievance Redressal Committees represent an even more accessible mechanism, mandated for every industrial establishment employing twenty or more workers. These committees must have equal representation from employers and workers, with the chairperson alternating between employer and worker representatives on a rotational basis each year. The Code specifically requires adequate representation of women workers proportionate to their employment in the establishment. An aggrieved worker may file an application before the Grievance Redressal Committee within one year of the cause of action arising, and the committee must complete its proceedings within thirty days of receiving the application. If dissatisfied with the committee’s decision or if no resolution is reached within the stipulated timeframe, a worker may approach the conciliation officer within sixty days, either directly or through their trade union.

Conciliatory Processes: The Role of Conciliation Officers

When preventive mechanisms fail to resolve disputes, the second tier of the dispute resolution framework comes into play through conciliation proceedings. The appropriate government appoints conciliation officers who are charged with the duty of mediating and promoting the settlement of industrial disputes. These officers may be appointed for specified areas, specified industries, or for one or more industries, either permanently or for limited periods, providing flexibility in addressing regional and sectoral needs.

Conciliation proceedings are deemed to have commenced on the date when the first meeting is held by the conciliation officer after receipt of notice of a strike or lockout. The conciliation officer must investigate the dispute without delay and all matters affecting its merits and right settlement, with authority to do all things deemed fit for inducing parties to reach a fair and amicable settlement. The officer possesses significant powers under the Code, including the same powers vested in a civil court for enforcing attendance of persons, examining them under oath, and compelling production of documents.[4]

The Code imposes strict timelines on conciliation proceedings. If a settlement is reached, the conciliation officer sends a report to the appropriate government along with a memorandum of settlement signed by the parties. If no settlement is achieved, the officer must send a full report within forty-five days of commencing proceedings, or within fourteen days if the conciliation relates to a notice of strike or lockout. These time limits may be extended only with the written agreement of the concerned parties and approval of the conciliation officer. Importantly, conciliation officers cannot hold proceedings relating to industrial disputes after two years from the date the dispute arose, ensuring that stale grievances do not burden the system indefinitely.

Adjudicatory Bodies: Industrial Tribunals and National Industrial Tribunals

The third and final tier of dispute resolution involves adjudication by Industrial Tribunals and National Industrial Tribunals. The Industrial Relations Code has abolished Labour Courts and Courts of Inquiry, consolidating adjudicatory functions under a streamlined tribunal system designed to deliver faster and more specialized justice in industrial matters.

Industrial Tribunals are constituted by the appropriate government for adjudication of industrial disputes. Each tribunal consists of two members—a Judicial Member and an Administrative Member—appointed by the appropriate government. The qualifications, recruitment methods, terms of office, and other service conditions are specified through rules, with the proviso that only persons who have held posts at the rank of Joint Secretary or above in government are eligible for appointment as Administrative Members. A bench of the tribunal may consist of both members sitting together, or a single Judicial Member or Administrative Member sitting alone, depending on the nature of the dispute.

Complex cases involving standing orders, discharge or dismissal of workers, legality of strikes or lockouts, retrenchment and closure, and trade union disputes are heard by a two-member bench consisting of both Judicial and Administrative Members. Other disputes may be decided by a single-member bench, facilitating expeditious disposal. The Judicial Member presides over benches where both members sit together. Decisions are made by consensus, but if members differ in opinion, the matter is referred to the appropriate government, which appoints a Judicial Member from another tribunal to hear the point in dispute. The decision is then made according to the majority view of all members who have heard the case.

National Industrial Tribunals are constituted by the Central Government for adjudication of disputes involving questions of national importance or where industrial establishments in more than one state are likely to be interested or affected. These tribunals also consist of two members—a Judicial Member who must be or have been a High Court Judge, and an Administrative Member who must be or have been a Secretary to the Government of India or an equivalent rank with adequate experience in labour matters. The National Industrial Tribunal follows procedures similar to Industrial Tribunals but addresses disputes with wider ramifications across state boundaries.

Voluntary Arbitration as an Alternative

Recognizing the benefits of alternative dispute resolution, the Industrial Relations Code introduces provisions for voluntary reference of disputes to arbitration. Where an industrial dispute exists or is apprehended, and both the employer and workers agree, they may refer the dispute to arbitration through a written agreement specifying the arbitrator or arbitrators. If an even number of arbitrators is appointed, the agreement must provide for an umpire who will decide if the arbitrators are equally divided.

A copy of the arbitration agreement must be forwarded to the appropriate government and the conciliation officer. If the appropriate government is satisfied that the persons making the reference represent the majority of each party, it may issue a notification giving non-parties concerned with the dispute an opportunity to present their case before the arbitrator. The Code specifically excludes the application of the Arbitration and Conciliation Act 1996 to arbitrations conducted under its provisions, maintaining a specialized regime for industrial disputes distinct from commercial arbitration.

Arbitration awards become enforceable thirty days after communication to the parties and the appropriate government, unless the government declares that giving effect to the award would be inexpedient on public grounds affecting national economy or social justice. Such declarations must be followed by an order accepting, rejecting, or modifying the award within ninety days, with the order laid before the legislature. This provision, while controversial, balances industrial autonomy with broader public policy considerations.

Regulatory Framework and Procedural Safeguards

Strikes and Lockouts: Enhanced Restrictions

The Industrial Relations Code introduces stricter regulations governing strikes and lockouts compared to its predecessor legislation. Workers must provide notice of strike at least fourteen days but not more than sixty days before striking. Strikes are prohibited during conciliation proceedings and for seven days thereafter, during proceedings before tribunals or arbitrators and for sixty days after conclusion of such proceedings, and during any period when a settlement or award is in operation. Employers face parallel restrictions on lockouts, requiring them to give similar notice and observe the same prohibition periods.

The Code expands the definition of “strike” to include “concerted casual leave on a given day by fifty per cent or more workers employed in an industry,” addressing a practice that previously fell into a grey area of the law. This provision has generated debate regarding its impact on workers’ fundamental right to freedom of association, particularly when proceedings extend for prolonged periods. In B.R. Singh v. Union of India (1989) 4 SCC 710, the Supreme Court had observed that the right to strike is an important weapon in the workers’ armory and that restrictions on this right could considerably reduce the bargaining power of trade unions.[5] The expanded prohibitions under the Code must be viewed against this constitutional backdrop.

Powers and Procedures of Adjudicatory Bodies

Industrial Tribunals and National Industrial Tribunals possess extensive powers to ensure effective adjudication. They have the same powers as civil courts regarding enforcement of attendance, compelling production of documents, issuing commissions for examination of witnesses, and other prescribed matters. All inquiries before these bodies are deemed judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code, providing serious consequences for false evidence or interference with proceedings.

Where a tribunal finds that discharge, dismissal, or termination of a worker was unjustified, it may set aside the order and direct reinstatement on such terms as it deems fit, or grant other relief including award of lesser punishment. During pendency of disputes, tribunals may grant interim relief in the interest of justice, relying only on materials on record without taking fresh evidence. This power ensures that workers are not left in financial distress during prolonged adjudication processes.

The Code mandates that where a tribunal orders reinstatement and the employer appeals to higher courts, the employer must pay the worker full wages last drawn during the pendency of proceedings in the High Court or Supreme Court, provided the worker files an affidavit that he was not employed elsewhere during this period. This provision, upheld in various judicial pronouncements, protects workers from the hardship of prolonged litigation while maintaining an employer’s right to appeal.

Settlements and Awards: Binding Nature and Enforcement

Settlements arrived at during conciliation proceedings or through written agreements between employers and workers outside conciliation proceedings have binding effect once properly recorded and communicated. Similarly, arbitration awards and tribunal awards become enforceable thirty days after communication unless the appropriate government exercises its power to defer enforcement on grounds of national economy or social justice.

Awards remain in operation for one year from the date they become enforceable, though the appropriate government may reduce this period or extend it for additional periods not exceeding one year at a time, with total operation not exceeding three years. Settlements continue in operation for the period agreed by parties, or if no period is specified, for six months from signing, continuing thereafter until sixty days after one party gives notice of intention to terminate.

Both settlements and awards bind all parties to the industrial dispute, parties summoned to appear in proceedings (unless the tribunal records they were summoned without proper cause), successors and assigns of employers, and all workers employed in the establishment on the date of dispute and those subsequently employed. This comprehensive binding nature ensures industrial peace and prevents individual workers from subsequently challenging collective agreements or awards.

The Code provides mechanisms for recovery of money due to workers under settlements or awards. Workers may apply to the appropriate government for recovery, which issues a certificate to the Collector who recovers the amount as an arrear of land revenue. Applications must be made within one year of the money becoming due, though this period may be extended for sufficient cause. Where disputes arise regarding the amount due or the money value of benefits, the tribunal decides such questions within three months, extendable for recorded reasons.

Special Provisions: Individual Worker Disputes

One of the most significant innovations in the Industrial Relations Code, 2020 is the recognition that disputes relating to discharge, dismissal, retrenchment, or termination of individual workers constitute industrial disputes regardless of whether any trade union is party to the dispute. This provision democratizes access to justice for individual workers who previously required collective support to invoke industrial adjudication machinery.

An individual worker aggrieved by termination may first approach the Grievance Redressal Committee in their establishment. If dissatisfied with the committee’s decision or if no decision is reached within thirty days, the worker may approach the conciliation officer within sixty days. Significantly, the worker may directly approach the Industrial Tribunal for adjudication after forty-five days from making an application for conciliation, without waiting for the conciliation process to conclude or requiring the appropriate government to make a reference. This provision removes governmental discretion from individual termination disputes, expediting access to adjudication.

The application to the tribunal must be made within two years from the date of discharge, dismissal, retrenchment, or termination. This limitation period balances the need for timely dispute resolution with workers’ practical difficulties in arranging legal and financial resources immediately after termination. Where workers are represented by negotiating unions or councils, such representatives present the case; in their absence, trade unions represent workers, and if no union exists, workers choose representatives in the prescribed manner.

Critical Analysis and Emerging Jurisprudence

The Industrial Relations Code, 2020 attempts to modernize dispute resolution while retaining proven features of earlier legislation. The abolition of Labour Courts and consolidation under Industrial Tribunals aims to reduce forum shopping and accelerate adjudication. However, concerns have been raised about whether the two-member tribunal structure with both judicial and administrative members might lead to conflicts in decision-making, particularly given the diversity of perspectives such members bring.

The provision allowing the appropriate government to defer or modify tribunal awards on grounds of national economy or social justice has been criticized as potentially violating the separation of powers doctrine. The Madras High Court had struck down similar provisions in the Industrial Disputes Act on constitutional grounds, holding that executive power to modify judicial determinations amounts to sitting in appeal over tribunals and violates the basic structure of the Constitution. The Industrial Relations Code replicates this provision, potentially inviting similar constitutional challenges.

The expanded restrictions on strikes raise questions about compliance with international labour standards, particularly ILO Convention 87 on Freedom of Association. Requiring advance notice of fourteen to sixty days, prohibiting strikes during conciliation and for seven days thereafter, and for sixty days after tribunal proceedings may be seen as excessively restrictive, particularly when proceedings drag on for years. Balancing industrial peace with workers’ constitutional right to freedom of association remains a delicate challenge.

The Code’s recognition of fixed-term employment and increase in thresholds for various provisions (such as standing orders applying to establishments with 300 workers instead of 100, and retrenchment permissions required for establishments with 300 workers instead of 100) reflect efforts to provide greater flexibility to employers. Critics argue this dilutes worker protection, while proponents contend it will encourage formal employment by reducing compliance burdens on smaller establishments.

Conclusion

The Industrial Relations Code, 2020 represents a significant attempt to rationalize and modernize India’s industrial dispute resolution framework. By consolidating three major laws and introducing structured bi-partite forums, streamlined conciliation processes, and specialized tribunals, the Code seeks to balance efficiency with fairness. The recognition of individual worker disputes as industrial disputes, introduction of voluntary arbitration, and emphasis on time-bound resolution are progressive features that could reduce pendency and improve access to justice.

However, the Code’s success will ultimately depend on effective implementation, adequate training of adjudicatory personnel, and development of supporting infrastructure. Ensuring that tribunals function efficiently, conciliation officers are skilled mediators, and grievance redressal committees operate fairly will be crucial. The legal framework, however well-designed, can only be as effective as the institutions and individuals who implement it.

As India continues its economic transformation, the industrial relations system must adapt to accommodate diverse employment forms, technological changes, and evolving worker expectations while maintaining core protections that ensure dignity and fairness in the workplace. The Industrial Relations Code provides a foundation for this evolution, but continuous monitoring, assessment, and refinement based on practical experience will be essential to ensure it serves the interests of both employers and workers in building a harmonious and productive industrial ecosystem.

References

[1] Industrial Relations Code, 2020, Bill No. 120 of 2020. Available at: https://labour.gov.in/sites/default/files/ir_as_introduced_in_lok_sabha.pdf 

[2] PRS Legislative Research, “The Industrial Relations Code, 2020” (2020). Available at: https://prsindia.org/billtrack/the-industrial-relations-code-2020 

[3] Bangalore Water Supply and Sewerage Board v. A. Rajappa, AIR 1978 SC 548. Available at: https://www.casemine.com/commentary/in/defining-‘industry’-under-the-industrial-disputes-act:-comprehensive-analysis-of-bangalore-water-supply-and-sewerage-board-v.-a.-rajappa-and-others/view 

[4] Aditya Gaggar, “Decoding the Industrial Relations Code, 2020,” SCC Times (October 25, 2020). Available at: https://www.scconline.com/blog/post/2020/10/25/decoding-the-industrial-relations-code-2020/ 

[5] B.R. Singh v. Union of India, (1989) 4 SCC 710. Available at: https://www.livelaw.in/columns/the-industrial-relations-code-2020-implications-for-workers-rights-164921 

[6] Lakshmikumaran & Sridharan, “Industrial Relations Code, 2020 – An overview” (2020). Available at: https://www.lakshmisri.com/insights/articles/industrial-relations-code-2020-an-overview/ 

[7] Lexology, “Industrial Relations Code, 2020 – An overview” (October 2, 2020). Available at: https://www.lexology.com/library/detail.aspx?g=9b788606-d4bd-4197-b27f-468ab93f0797 

[8] PMC, “Imbalancing Act: India’s Industrial Relations Code, 2020” National Centre for Biotechnology Information. Available at: https://pmc.ncbi.nlm.nih.gov/articles/PMC9409614/ 

[9] Legal Service India, “Dispute Resolution Mechanisms: Enhancements In The Industrial Relations Code, 2020” (2024). Available at: https://www.legalserviceindia.com/legal/article-21149-dispute-resolution-mechanisms-enhancements-in-the-industrial-relations-code-2020.html