Salient Features of Industrial Relations Code, 2020

Salient Features of Industrial Relations Code, 2020

The Industrial Relations Code, 2020 hereinafter referred to as “Code” has been introduced as a part of the labour legislation. The Ministry of Labour and Employment has divided the labour law codes into four parts i.e. Industrial Relations, Wages, Social Security, and Welfare and safety. The Code has been passed by the Parliament and is yet to receive the assent of the President. It incorporates legal aspects relating to the settlement of labour disputes and collective bargaining. The enactment of the Code has subsumed three labour law enactments including the Industrial Dispute Act, Industrial Employment (Standing Orders) Act, and the Trade Unions Act.

Some key changes relating to labour laws have been brought up by the code. These are summarized below: –

Definition of workman: – The definition of the workman has been improved under the Code to include the persons in supervisory capacity getting wages up to 18K per month. Apart from this, now working journalists as defined under the Working Journalists and Other Newspaper Employees and Miscellaneous Provisions Act and sales promotion employees defined under Sales Promotion Employees Act are also covered under the revised definition.

Applicability: – Earlier, the Industrial Disputes Act has a threshold of applicability on establishments having 100 or more employees. But the Code has raised this threshold limit to 300 and also given the power to the appropriate govt. to excuse any industrial establishment or class thereof from all or some of the provisions of the code.

Trade Union: – The Code provides that when there is more than one union in an establishment, the status of a bargaining union will be granted to the one having 51% of the employees as members. The Code has decreased this threshold limit from 75% that was determined in the amendment bill of 2019. If just in case, there is not a single union that meets the threshold limit as mentioned above, then the council can be established of representatives of the various unions having at least 20% of employees as members. Moreover, the registered trade unions may be recognized by the Centre or State Govt. as Centre or State unions as per requirement.

Strikes and Lockouts: – The definition of strike includes the casual leave taken by 50% of staff or more employed in the establishment on a given day. Despite this, trade unions are required to serve 14 days notice before going on strike. However, this notification is valid for a period of 60 days. Similarly, no employer can lockout any of its employees without giving prior notice of 14 days, and the same will remain in force for a period of 60 days. Besides this, the Code prohibits strikes and lockouts in the following situations:-

  • During and upto 7 days after the arbitration.
  • During and upto 60 days after or before court proceedings.
  • During the period when the arbitration award is in force.

Furthermore, the employers are required to report to the appropriate govt. as well as the conciliation officer within 5 days from receiving or giving notice of strike/lockout.

Concept of Re-skilling Fund: – The Code has introduced a new concept for employees who are laid off from the establishment by the employer. The employer will make the contribution equal to the 15 days of salary last drawn by the employee being retrenched. Such fund must be directly credited to the bank account of an employee within 45 days of the employee’s dismissal.

Lay-off and retrenchment: – According to the Code, the provisions of lay-off and retrenchment will not be applicable to the establishments having a workforce of less than 50 workers on an average per working day or to seasonal establishments. Additionally, the establishments with less than 300 workers can be layed-off, retrenched, and closed without government approval.

Standing Orders: – The Code provides that the provisions concerning standing orders will be applicable to the establishments that have a workforce of 300 or more on any day in the past 12 months. According to this, an employer will be required to prepare a draft of standing orders by following the Govt. model on standing orders within 6 months from the date the Code come into force.  Importantly, such draft must be prepared in consultation with recognized bargaining unions and the same must be certified by the certifying officer.

Grievance Redressal Mechanism: – All establishments employing more than 20 workers must have one or more grievance redressal committees for resolution of clash arising out of individual complaints. Such a committee must consist of the equivalent number of members on behalf of the employees and the employers. Notably, there must be adequate representation of women workers in the committee and the chairman of the committee shall be chosen alternatively from the workers and the employer.

Govt.’s power to reject or modify tribunal awards: – The Govt. can put back the enforcement of awards passed by the tribunals on certain grounds including threatening the national economy and for the sake of social justice.

Conclusion: –        

To cap it all, amendments to the labour laws are important to protect the interest of the employees so that they may not be victimized. This significant area of law was not recognized for very long, while there are laws, yet these are not enough to protect the best interests of the workers as well as the employers. Thus, having a codified law will help both to secure their privileges and to sustain peace in the place of work.

-Kiranpreet Kaur

Associate at Aggarwals & Associates, S.A.S. Nagar, Mohali


Validity of e-contracts

Validity of e-contracts

With the advent of technology, the way of executing documents has also changed. Electronic agreements and electronic signatures are gaining momentum in recent times owing to the increasing demand for modern as well as convenient methods for entering into business relationships and binding transactions. Technological developments have not only changed the ways in which these transactions are entered into but the execution process has also revolutionized drastically. But are they legally valid? To explore the answer for the same, we need to go through the relevant laws.

However, before interpreting the legal provisions, firstly, it is required to know that what is e-contract? Therefore, lets’ have a glance at the general meaning of the e-contracts.

What are e-contracts?              

E-contracts are those contracts that are not paper-based; rather these are entered into through electronic form. These are generally made for speedy entering into a contract or for the ease of the parties. They are best made between the parties who live in two different parts of the world and have to enter into an agreement. In this proliferating world, it is the most convenient method to enter into a contract without being physically exhausted. Basically, there are two parties involved in the e-contract i.e., originator and addressee.

According to IT Act, 2008, an originator is a person who sends, generates, stores, or transmits any electronic message to be sent, generated, stored, or transmitted to any other person and it does not include the intermediary. On the other hand, an addressee is a person who is intended by the originator to receive the electronic record but does not include any intermediary.

Types of e-contracts: –

E-contracts can be broadly divided into three categories. These categories are discussed below: –

Browse Wrap Agreement: – These types of agreements are intended to be binding upon the contracting party by use of the website. Generally, these agreements include the user policies and terms of services of the websites. To illustrate, the links named with “terms of use”, “user agreement”, and “terms of use” given at one corner or bottom of the website are called browse-wrap agreements.

Shrink Wrap Agreement: – These contracts are in the form of a license wherein the terms and conditions of the contracts are enforced upon the contracting parties. The terms and conditions of these contracts are present on the plastic or in manual accompanying with the software products which the customer buys.

Click Wrap Agreement: – Under this category, the user is required to give his/her consent to the terms and conditions which are known as “end-user agreement” and govern the licensed usage of the software by clicking “Ok” or “I agree” button. However, such user agreement must be specifically conveyed to the party and any changes made to the terms and conditions must also be specifically intimated to the user.

Validity of e-contracts under Indian Laws: –

E-contracts are very well recognized in various laws including Information Technology Act, 2000 and the Indian Evidence Act, 1872. The IT Act recognizes the basic characteristics of the e-contracts like communication of proposal and acceptance, revocation of the proposal as the case may be which could be expressed either in electronic form or through means of an electronic record.

Further, e-contracts are also recognized under the Indian Evidence Act, according to which, the term “document” includes any information contained in an electronic record that is printed on paper, stored, recorded, or copied in optical or magnetic media produced by a computer. Such information is in conformity with the conditions of Section 65B of the Act which shall be admissible in any proceedings, even without any further proof or producing the original document.

Moreover, on perusal of Section 10 of the Contract Act, it also throws light on basic principles required for an agreement to make it a valid one. Here are the contents of Section 10 of the Contract Act: –

“All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.”

Therefore, contracts executed electronically are also governed by the basic principles provided in the Contract Act, which mandates that a valid contract should have been entered into with free consent and for a lawful consideration between two majors. Hence, there is no provision in the Indian Contract Act, which prohibits the enforceability of e-contracts.

However, free consent is considered the main essence of a valid contract. As far as e-contracts are concerned, an option is always given to the party either to accept or reject the same.

-Kiranpreet Kaur

Associate at Aggarwals & Associates, S.A.S. Nagar, Mohali