Impact of Worker Definition on Industrial Relations


Animay Singh
Simpliance COE




Worker Definition on Industrial Relations


The definition of worker is one of the key aspects to be interpreted to understand the changes brought in by any of the four new labour Codes. Our earlier blog in this series examined the definition of worker under the Code on Social Security, 2020. In this post we shall analyze the use of the term worker under the Industrial Relations Code, 2020. The above shall shed light on the reasons behind the use of the term and its impact on industrial relations and compliance under the Code.

The term worker is used extensively throughout the Code and is defined under Section-2(zr) in a manner similar to the Code on Wages, 2019. Most operative provisions that lay down substantive law such as applicability of standing orders, constitution of grievance redressal committee, industrial disputes etc. use the term worker. The term employee is sparsely used and is found in only general contexts, such as under the definition of employer.

It is important to note, however, that under the Industrial Relations Code, the term has a proviso. It specifies that with respect to Chapter-III pertaining to trade unions, the term worker means all persons employed in trade or industry and includes workers as defined under the Unorganised Workers’ Social Security Act, 2008.

The implication of the above is that the remainder of the Code pertaining to dispute settlement and standing orders is applicable only to workers. Whereas the Chapter pertaining to trade unions has wider coverage owing to the aforementioned proviso.

The subsequent section shall shed light on the reason for the same. It shall also provide insight into why the term worker has been adopted throughout the Code. This shall provide the readers with holistic insight into the import of and objects that underlie the Industrial Relations Code, 2020.

Intention, Interpretation and Implications

The intention behind the use of the term worker instead of employee throughout the Code is to ensure that it operates in consonance with the enactments it is subsuming. The Industrial Relations Code, 2020 subsumes laws relating to trade unions, industrial disputes and conditions of work (standing orders) respectively. The first two have been applicable to undertakings that are considered industry. Whereas standing orders are applicable to both industries as well as shops and establishments depending on the rules in a particular State.

Another reason as to why worker is used is due to the fact that persons falling under the scope of the term are those who require protection under the aforementioned legislations. Disputes involving persons falling within the scope of worker generally pertain to industries. This can be understood further by examining the set of individuals excluded from the scope of worker. The definition excludes a person:-

(a) who is subject to the Air Force Act, 1950, or the Army Act, 1950, or the Navy Act, 1957; or

(b) who is employed in the police service or as an officer or other employee of a prison; or

(c) who is employed mainly in a managerial or administrative capacity; or

(d) who is employed in a supervisory capacity drawing wage of exceeding eighteen thousand rupees per month or an amount as may be notified by the Central Government from time to time.

From the above it is clear that the intention is to exclude those employed in managerial/administrative capacities and those who are employed in supervisory capacities drawing more than Rs. 18,000 per month. The intention behind excluding the above set of individuals is to ensure that persons falling under the scope of worker are those forming the lower part of an organization’s hierarchy.

The same is substantiated by analyzing the expanded definition of industry, which shall now cover a larger set of undertakings than it previously did. For example, IT/ITes companies will also be considered an industry under the Industrial Relations Code. The implications of this are as follows:

Firstly, all persons in entry-level positions as well as those employed in task-completion roles will be considered workers. This operates irrespective of their compensation as the threshold of Rs. 18,000 is applicable only to those in supervisory capacities. Therefore, in a scenario where a programmer for example working in an IT company, would be considered a worker if he is performing his tasks without being tasked with any supervisory/administrative/managerial responsibilities.

Secondly, the number of people falling under the scope of workers is going to rise substantially. Partially due to the first implication listed above and partially due to the expanded definition of industry.

Therefore, the compliance takeaway from the above would be for employers to be clear about which of their employees fall under the category of worker. Clear and defined roles and responsibilities along with a company policy that delineates hiring practices for employees and workers respectively will be beneficial. This shall translate into contracts of employment being clear, concise and detailed when it comes to the roles and responsibilities of a particular individual.

The above is imperative to ensuring that compliance process management runs smoothly in an organization as there are differing sets of requirements for workers and employees, respectively.

Do you have any questions relating to the distinction between worker and employee under the Industrial Relations Code, 2020?

Are you aware of the internal policy changes that are going to arise due to the same?

Has your organization adapted to the changes that are going to arise?

Drop your queries and answers in the comments.

Disclaimer: This blog is meant for informational purposes and discussion only. It contains only general information about legal matters. The information provided is not legal advice and should not be acted upon without seeking proper legal advice from a practicing attorney.
Simpliance makes no representations or warranties in relation to the information on this article.

How useful was this post?

Click on a star to rate it!

2 thoughts on “Impact of Worker Definition on Industrial Relations”

  1. In PF& Gratuity Act employed persons are called as employees.In New Code of wages the employee defination also covers persons employed in managerial & administrative cadre.
    As such it will be applicable all cadre of employees
    Definition of employee under wage code:
    “(k) “employee” means, any person (other than an apprentice engaged under the
    Apprentices Act, 1961), employed on wages by an establishment to do any skilled,
    semi-skilled or unskilled, manual, operational, supervisory, managerial, administrative,
    technical or clerical work for hire or reward, whether the terms of employment be
    express or implied, and also includes a person declared to be an employee by the
    appropriate Government, but does not include any member of the Armed Forces of the
    The definition of employee in wage code & social code (covering PF Gratuity provisions) is same.
    Is it rightly interpreted ?

Leave a Reply

Your email address will not be published. Required fields are marked *