The Industrial Relations Code, 2020

What it does

The Industrial Relations Code, 2020 (Act No. 35 of 2020) is one of the four labour codes. It brings together the law that was in the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946 and the Industrial Disputes Act, 1947, and it covers the registration and recognition of trade unions, the terms of employment set by standing orders, the machinery for the settlement of disputes, and the rules on strikes, lock-outs, lay-off, retrenchment and closure.

On job loss, three chapters carry the rules. Chapter IX (sections 65 to 76) covers retrenchment, lay-off and closure generally. Chapter X (sections 77 to 82) sets a permission regime for the largest establishments. Chapter XI (section 83) provides for a worker re-skilling fund, into which a payment is made on every retrenchment.

Who it binds

Employers and workers in industrial establishments and the trade unions that represent workers. The permission regime in Chapter X is narrower. Section 77(1) applies it to an industrial establishment in which not less than three hundred workers, or such higher number as the appropriate Government may notify, were employed on an average per working day in the preceding twelve months. Section 77(3) limits an industrial establishment, for that purpose, to a factory, a mine or a plantation, each as defined in the Factories Act, 1948, the Mines Act, 1952 or the Plantations Labour Act, 1951.

What has changed, and when

• The Code came into force on 21 November 2025, appointed under section 1(3) by notification S.O. 5320(E).
• The Central Government then made the Industrial Relations (Central) Rules, 2026, by notification G.S.R. 342(E) of 8 May 2026, in force on publication. They supersede the Industrial Disputes (Central) Rules, 1957 as to Part II and Parts V to VIII.
• The Industrial Relations Code (Amendment) Act, 2026 (Act 1 of 2026), deemed in force from 21 November 2025, changed only section 104. The tribunals and statutory authorities under the three repealed Acts keep functioning until their counterparts under the Code become functional.

What turns on it in practice

The main question is size. From 21 November 2025, a factory, mine or plantation that averaged 300 or more workers a day over the preceding twelve months needs the appropriate Government's prior permission to lay off, retrench or close. A retrenchment there needs three months' notice, where a smaller establishment gives one month's notice and only informs the Government. In both classes a retrenchment carries fifteen days' average pay for each completed year of service, and a separate payment of fifteen days of last drawn wages into the worker re-skilling fund within ten days.

An employer near the line has to count carefully. The test is an average over twelve months, so a business that expands, contracts or uses contract labour can fall on either side of 300 at different times, and the count that matters is the count in the preceding twelve months, not the headcount on the day. The definition of an industrial establishment has not been updated to the definitions in the Occupational Safety, Health and Working Conditions Code, 2020, which came into force on 21 November 2025 and repealed the three older Acts that section 77(3) refers to, so the cross-reference is a point on which a dispute may arise.

The Code is the statute behind the employment work of this practice: advice on disciplinary process, industrial relations and the exit of workers, and representation in the disputes that follow. The site's note on retrenchment, lay-off and closure under the Code takes the 300-worker line in detail, and its note on what the labour codes cost sets the Code in the larger change.