The Industrial Relations Code, 2020 consolidates three earlier laws, the Trade Unions Act, the Industrial Employment (Standing Orders) Act and the Industrial Disputes Act, into one framework governing unions, disputes and retrenchment.

The key change: a higher permission threshold

The Code raises the threshold at which an industrial establishment needs prior government permission before layoff, retrenchment or closure from 100 workers to 300, a significant loosening for mid-sized manufacturing and industrial employers, though individual states may notify a higher threshold still. Retrenchment compensation remains 15 days’ last-drawn wages per completed year, payable within 45 days. The Code also introduces a formal trade union recognition mechanism the old Trade Unions Act lacked: a single union in an establishment becomes the automatic sole negotiating union, while multiple unions require 51% support on the muster roll to earn that status, with a fallback negotiating council built from unions holding at least 20% support if none crosses that bar. It took central effect on 21 November 2025, alongside the other three labour codes, with state rules still rolling out.

Frequently asked questions

Does the 300-worker threshold apply everywhere?

It’s the national floor under the Code, but states can set it higher, so the actual applicable threshold depends on your specific state’s notified rules.

What happened to standing orders under this Code?

The concept carries forward from the old Standing Orders Act, with the applicability threshold also raised to 300 workers. See standing orders for detail.

Is the old Industrial Disputes Act still cited in practice?

Its substance now lives inside this Code, though people still commonly refer to it by its old name out of habit.

See standing orders for the specific provision this Code carried forward with a changed threshold.