INTRODUCTION
India’s vast and historically vulnerable workforce has long faced the risk of exploitation, particularly given the country’s sizeable labour surplus. To address this structural imbalance, Parliament and State Legislatures drawing on their concurrent powers under the Constitution have enacted a body of labour legislation designed to protect workers from unfair treatment. This shared legislative competence, however, has also meant that uniform enforcement across states remains a challenge, since central laws in the concurrent domain require corresponding state adoption to take full effect.
Historically, labour protections were spread across 26 separate statutes. Recognising the complexity and fragmentation this caused, the central government undertook a significant consolidation exercise, distilling these laws into four comprehensive Labour Codes: the Code on Wages, 2019 (governing minimum wages and remuneration)[1]; the Code on Social Security, 2020 (covering benefits such as pensions and insurance)[2]; the Occupational Safety, Health and Working Conditions Code, 2020 (regulating workplace safety and working environments)[3]; and the Industrial Relations Code, 2020 (addressing employer-employee relations, union recognition, and industrial disputes)[4]. The last of these — the Industrial Relations Code — forms the focus of this blog, which examines how it evolved from, and improved upon, the foundational framework established by the Trade Unions Act, 1926.[5]
THE TRADE UNIONS ACT, 1926: FOUNDATIONS AND LIMITATIONS
The Trade Unions Act, 1926 was the first comprehensive legislation in India to provide a legal framework for the formation, registration, and functioning of trade unions. Broadly defined under the Act,[6] a trade union encompasses any combination permanent or transient formed chiefly to regulate the relations between workers and employers, or among workers themselves, or among employers. The definition also extends to federations of unions, though purely commercial arrangements such as partnership agreements or the sale of business goodwill are explicitly excluded from its ambit.
One of the Act’s significant contributions was the conferral of legal recognition upon registered trade unions, which in turn granted members certain defined rights and immunities. The registration process thus transformed informal worker groupings into entities capable of acting in a legally recognised capacity. In R.G. D’Souza v. Poona Employees Union[7], the Supreme Court affirmed the legal character and attendant powers of a registered trade union, reinforcing the significance of formal recognition under the Act.
The Act also created a mechanism for addressing trade disputes broadly understood as disagreements between employers and workers (or among workers inter se, or among employers) concerning employment terms, conditions of labour, or the fact of employment itself[8]. In the landmark case of B.R. Singh v. Union of India,1989[9], the Supreme Court went further, recognising trade unions as indispensable vehicles for collective bargaining and acknowledging the right to strike as a legitimate tool in the worker’s arsenal — a significant judicial endorsement of labour action.
Despite these contributions, the 1926 Act had notable structural weaknesses. While it granted legal status to registered unions, it offered no mechanism to compel employers to formally recognise any particular union as a bargaining representative. There was also no minimum membership threshold, meaning that even a handful of workers could constitute a trade union a provision that, in practice, contributed to the proliferation of politically fragmented, often rival unions within the same industry. Enforcement mechanisms were weak, dispute resolution procedures were procedurally cumbersome, and the absence of a central recognition framework left workers in a precarious bargaining position. These limitations set the stage for the more comprehensive regime introduced by the Industrial Relations Code, 2020.
THE INDUSTRIAL RELATIONS CODE, 2020: A CONSOLIDATED AND MODERNISED FRAMEWORK
The Industrial Relations Code, 2020 represents a sweeping consolidation of three earlier statutes: the Trade Unions Act, 1926; the Industrial Employment (Standing Orders) Act, 1946; and the Industrial Disputes Act, 1947. By bringing these disparate regimes under a single umbrella, the Code pursues several overarching objectives: streamlining the regulatory landscape, strengthening worker protections, fostering business flexibility, ensuring fair and equitable worker representation, and establishing more effective mechanisms for resolving industrial disputes.
Perhaps the most structurally significant reform in the Code is the mandatory introduction of a Negotiating Union or Negotiating Council[10] in every establishment. Under the prior regime, collective bargaining was contingent on voluntary employer recognition an arrangement that gave employers considerable latitude to simply refuse to engage with unions. The Code fundamentally alters this dynamic: it requires industries to constitute a Negotiating Council with worker representation of at least fifty per cent, thereby converting recognition from a discretionary employer decision into a statutory entitlement. This shift is arguably the Code’s most consequential innovation, as it transforms what was a contested battleground into a structured, enforceable process.
The Code also introduces a minimum membership threshold for trade union registration set at ten per cent of the workers in an establishment, or one hundred workers, whichever is lower. This requirement, absent under the 1926 Act, is intended to curb the fragmentation of union representation and encourage consolidation into more stable, representative bodies. Additionally, the Code mandates clear rules regarding the internal constitution and governance of trade unions, with the aim of promoting transparency and accountability in their functioning. Unfair labour practices[11] by both employers and unions are explicitly prohibited under the Second Schedule to the Code.
On the question of dispute resolution, the Code provides a multi-tiered framework designed to address grievances at the appropriate level:
- Grievance Redressal Committees, which handle disputes arising at the individual employee level;
- Conciliation proceedings, as a first step for collective disputes;
- Voluntary Arbitration, as an alternative to formal adjudication; and
- Adjudication by Industrial Tribunals or the National Industrial Tribunal for larger or more complex disputes.
This tiered structure reflects a deliberate policy choice to resolve disputes at the lowest and most proximate level possible, reserving formal judicial-style adjudication for matters that cannot be resolved through dialogue. The result is a system better suited to the realities of modern industrial relations, where speed and proportionality of response are as important as ultimate legal correctness.
CONCLUSION
The transition from the Trade Unions Act, 1926 to the Industrial Relations Code, 2020 reflects nearly a century of evolving understanding about the relationship between labour, capital, and the state. The 1926 Act was a foundational but limited instrument: it gave workers the formal recognition of organised identity through union registration, yet stopped short of compelling employers to engage with that identity in any meaningful way. The critical gap between legal existence and practical power was left unbridged.
The 2020 Code addresses this gap directly. By mandating recognition, establishing minimum membership thresholds, consolidating dispute resolution under one statutory roof, and prohibiting unfair practices, it creates a qualitatively different regime one that is more balanced, more enforceable, and more attuned to the demands of a contemporary economy. Whether its provisions are ultimately effective will depend on consistent state adoption and robust enforcement machinery, but as a legal framework, the Code represents a meaningful step forward in the protection of workers’ rights in India’s rapidly evolving labour market.
Author(s) Name: Vilashini TK (Presidency University)
References:
[1] Code on Wages 2019
[2] Code on Social Security 2020
[3] Occupational Safety, Health and Working Conditions Code 2020
[4] Industrial Relations Code 2020
[5] Trade Unions Act 1926
[6] Trade Unions Act 1926, s 2(h)
[7] RG D’Souza vs Poona Employees Union & Anr AIR 2015 SC 954 [21]
[8] Trade Unions Act 1926, s 2(g)
[9] B R Singh and Ors v Union of India (1989) 4 SCC 710 [8]
[10] Industrial Relations Code 2020, s 14
[11] Ibid s 2(zo), sch II