Article (November-2020)


FDI must pour in post-IRC Regime: Will it?

K.R. Shyam Sundar

Designation : -   Professor, HRM Area, XLRI

Organization : -  Xavier School of Management, Jamshedpur


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The objective of the Industrial Relations Code (IRC) gazetted on 29 September 2020 is to rationalize and amalgamate three labour laws: the Trade Unions Act, 1926 (TUA), the Industrial Employment (Standing Orders) Act, 1946 (IESOA) and the Industrial Disputes Act, 1947 (IDA) and to facilitate ease of doing business (EODB) "without compromising" labour welfare and benefits. IRC is an imbalanced amalgam of flexibility to employers and union rights of workers.

IRC is historic as it cures the historical malady that existed in the TUA, viz. absence of a statutory provision regarding trade union recognition. This deadly deficit plagued the industrial relations in numerous firms over the decades as inter-union and intra-union rivalry often destroyed the fabric of industrial relations and even led to closure of business operations.  Now, employers will have to recognize a trade union where there is only one and in the cases of multiple unions, a "negotiating agent" or in case of multiple unions a "negotiating council" as per the ratios prescribed in IRC. This is a huge step in not only vesting workers with bargaining rights but also to enable EODB as foreign firms need not bother about who to negotiate with in India if they respect collective bargaining rights of workers.

The lawmakers have prescribed ceiling on the time taken for domestic inquiry to "ordinarily" 90 days which is a welcome change as the inquiry often thanks to delaying tactics of both the parties meanders on for months if not years. Given the variations in the domestic inquiry process IRC could have provided model procedure of it. This would rationalize to a larger extent the procedure.

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