Standing Orders Under the Industrial Relations Code

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Standing Orders

Introduction

The Industrial Employment (Standing Orders) Act, 1946 currently defines the conditions of employment in industrial establishments. It applies to every industrial establishment in a State based on a threshold fixed by the State Government. In the current framework an establishment is required to draft its own set of standing orders based on model standing orders issued by State Governments. Following this, the draft standing orders are submitted to the Jurisdictional Labour Commissioner.

As mentioned above, the appropriate certifying officer scrutinizes the draft standing orders submitted to ascertain whether there are any infirmities. These include failing to provide for matters specified in the Schedule, objections provided by Trade Unions or workmen in the establishment and any further modifications/additions to be made.

On completion of the above a tripartite consultation is held involving the employer, the employee/their representatives as well as any Trade Union/their representatives to discuss the draft standing orders. After hearing the individual parties’ concerns and objections the standing orders may be modified. Once this entire process concludes the draft standing orders are certified and the employer is intimated with regards to the same.

The following section shall examine some of the shortcomings of the Industrial Employment (Standing Orders) Act. Subsequently, we shall examine the steps taken to remedy the same under the labour codes and study the introduction of sector specific standing orders.

Drawbacks of the Industrial Employment (Standing Orders) Act

While the main objectives of the Act, related to regulating conditions of recruitment, discharge, leave, holidays etc., were achieved, the procedure described above created problems[s21] . The tripartite consultation process often took up copious amounts of time leading to a heavy backlog of pending applications for certification. Furthermore, in cases where there were multiple unions in an establishment, there was often lack of consensus amongst the workers’ representatives as well. This led to a varying range of demands leading to time-consuming negotiations that often ended with no progress.

A major bone of contention also involved applicability of the standing orders to different industries. This arose out of provisions under State Shops and Establishments Acts that extended the applicability of the Payment of Wages Act to all establishments registered thereunder. Several States were thus required to issue clarifications or provide exemptions to certain industries, for instance IT industries in Karnataka, from the application of the Industrial Employment (Standing Orders) Act. This confusion has been done away with as Section-28(1) of the Chapter read with the definition of industry provides complete clarity on applicability.

Another major drawback of the enactment was that in its pursuit for uniformity it provided for the same set of standing orders across different types of industrial establishments. A one size fits all solution proved to be unsuitable in case of differing types of establishments carrying out work that varied in its nature. The matters that need to be provided for may differ and offering a uniform solution can often curtail an employer’s flexibility in enacting even beneficial measures in an establishment.

Standing Orders Under the Industrial Relations Code  

The first major change brought in under the Code is the increase in the applicability threshold of standing orders from 100 workers to 300 workers. This is a change whose effect remains to be seen as the increased threshold could lead to exclusion of a large number of workers employed in MSMEs. These workers form a sizable majority of India’s workforce leading to concerns amongst stakeholders about their exclusion.

The next major change brought in is the exclusion of the State Government’s power to make model standing orders. The Code vests this power solely in the Central Government, which shall reduce the confusion surrounding compliance with standing orders from one state to another. The impact of this change will be reduced compliance burden on establishments pan-India and overall simplification in compliance with standing orders.

The reason the above change is feasible is due to the decision taken to introduce ‘industry-specific’ standing orders. This means that the standing orders applicable to manufacturing industries will be different from those applicable to IT/ITes industries. What this ensures is that the conditions of work provided for in the standing orders are relevant to the nature of work in that particular industry. This should result in greater compliance and conformity with the conditions of work that are stipulated.

Another beneficial change brought in is the introduction of fixed timelines for the preparation and certification of draft standing orders. Employers are given a period of 6 months from the date of commencement of the Code to prepare the draft standing orders. Trade Unions are given ample scope to provide their comments, however, in cases where there are multiple unions with no single union being composed of 51% of the workers in an establishment, a negotiating council shall represent the varied interests of the workers. This will ensure that lesser time is spent in lengthy negotiations with multiple unions.

Where an employer adopts the model standing orders of the Central Government, then the same is deemed to have been certified. The employer is merely required to forward information with regards to the adoption to the certifying officer. This shall result in reduced timelines when it comes to implementation and adoption of standing orders by an industry.

Thus, overall, the effect of the Industrial Relations Code on the scheme of Standing Orders in India is beneficial with the major concern being around the threshold that has been set under the Code[s22] . However, doubts remain over the application of this Chapter to all establishments falling under the liberally interpreted definition of industry. For example, several stakeholders in the IT/ITes industry objected to the application of standing orders as they argued that the conditions of employment in the industry were largely regularized and provided employees with significant benefits. However, the counterargument raised by stakeholders such as employees’ unions was that the application of standing orders would lead to the implementation of a common set of basic conditions of work. This would result in better outcomes for all those involved and would provide a referential framework in case of disputes.

What are your thoughts on the scheme of standing orders provided under the Industrial Relations Code, 2020? Is the 300-worker threshold practical considering the composition of our labour market? Do you think IT/ITes companies should receive exemption from the application of the above provisions? If you have any doubts relating to the scheme provided under the Code or the changes it makes to the current enactment drop your thoughts and queries in the comments below.

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.

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Animay Singh
Simpliance COE

Biography

4 thoughts on “Standing Orders Under the Industrial Relations Code”

  1. What happens to the current SO certified under ieso act, once the IR code is implemented , if such establishment is < less than 300 headcount,can I scrap my existing SO or amend it at my choice?

    What if An establishment does adopt model SO and later headcount falls below 300? Am I still bound by model SO or can I simply say, it doesn't apply to me any more?

    1. Hi,
      The current standing orders under the Industrial Employment (Standing Orders) Act would lapse depending on the notification that brings the Industrial Relations Code into force. This is because Section-104 of the IR Code empowers the Central Government to repeal certain provisions of the IESO Act. Therefore if the Central Government chooses to retain certain provisions they may remain in force in spite of other provisions being repealed, thus it is prudent to wait for the notification before reaching a conclusion. It is likely that the Central Government will implement the new threshold, therefore if your establishment falls below the same there may be no legal requirement to maintain Standing Orders. With regards to the second question of an establishment’s headcount falling below 300, Section-28(1) of the IR Code makes it clear that standing orders shall apply to every industrial establishment wherein three hundred or more than three hundred workers, are employed, or were employed on any day of the preceding twelve months. The term ‘were employed’ makes it clear that it is irrelevant if the headcount falls below the threshold as long as 300 or more workers were employed on any one day in the previous year

      Regards
      Animay

        1. Hi,
          Reference would not be beyond the previous year as the provision clearly states ‘on any day of the preceding twelve months’

          Regards
          Animay

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