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Industrial Relations Code

Understanding standing orders under the Industrial Relations Code

August 25, 2021

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This article is written by Arya Mittal from Hidayatullah National Law University. The article analyses the provisions of standing orders under the recently enacted Industrial Relations Code, 2020.

Introduction

Recently, the parliament enacted the Industrial Relations Code, 2020 among the other three labor law codes, which is yet to come into force. The Code combines three Acts, one of which is the Industrial Employment (Standing Orders) Act, 1946 that is the scope of the current article. This Act was enacted to streamline the relations between employers and employees in industrial establishments. The report of the Second National Commission of Labour was taken into consideration to prepare the Code. The Code has changed many provisions of the former Act but undoubtedly, will have a positive impact in the unorganized sector of the country where the laborers are hardly provided with a healthy work environment.

The importance of standing orders in the unorganized sector cannot be emphasized enough as the standing orders impose a statutory duty on both the employer and employees to comply with the standing orders, leading to less chaos, better administration, and lesser disputes between the employer and employees.

Historical background

An Act titled Industrial Employment (Standing Orders) Act, 1946 was passed by the parliament to organize the industrial establishments by instructing the employers to prepare standing orders which would lay down the working conditions of the employees. Industrial Employment (Standing Orders) Central Rules, 1946 were also notified by the central government in furtherance of the Act. In case the employer deviates from these rules, the employee can get it enforced through Labour Court or Industrial Court. However, the Act prescribed that only those industrial establishments which have a hundred workers or had a hundred workers (changes to three hundred by Industrial Relations Code, 2020) on any day of the year would be liable to prepare standing orders.

With the enactment of the Industrial Relations Code, 2020, there have been changes in the provisions relating to standing orders. The provisions of the former law have now become a part of the Code and are dealt with in Chapter IV of the Code from Sections 28 to 39. However, the Code has not been enforced yet and its respective rules are yet to be notified.

Concept of standing orders

Meaning of certified standing orders and model standing orders

Section 2(zj) of the Industrial Relations Code, 2020 defines standing orders as “orders relating to matters set out in the First Schedule”. As regards the First Schedule, it states eleven matters which are as follows:

Classification of workers;
Mechanism of intimidating attendance, wage rates, etc;
Shift working;
Attendance and late coming;
Conditions and procedure for leave application;
Requirement to enter premises by certain gates, and liability to search;
Non-functioning of certain areas and related rights and liabilities;
Conditions relating to termination;
Misconduct related provisions;
Mechanism for redressal; and
Any matter notified by the appropriate government.

As regards Certified Standing Orders, a draft standing order is prepared by the employer based on First Schedule which is then sent to the Certifying Officer for certification. If the draft standing order is successfully certified, such standing order is enforced in the industrial establishment.

The process of certification takes some time and till that time the model standing orders are made applicable as per Section 29(2). Nevertheless, the Code provides that any industrial establishment can even adopt the model standing orders and can inform the same to the Certifying Officer following Section 30(3) of the Code. These model standing orders are prepared by the Central Government as provided in Section 29(1) of the Code.

Process for certification

The procedure for certification of standing orders is provided in Section 30 of the Code. The process is as follows:

The employer shall prepare a draft standing order in accordance with the First Schedule and provisions of the Code and take recommendations from trade unions or representatives of employees, if any.
He shall then forward the draft standing order to the Certifying Officer either electronically or in any other prescribed manner.
The Certifying Officer on receipt of the draft, shall forward the same to trade unions or representatives of employees and make suitable modifications if required within sixty days.
If the Certifying Officer does not make any objection within the stipulated period, then the draft standing order shall be deemed to have been certified and shall be enforced in the establishment.
Additionally, an industrial establishment can also opt to adopt the model standing order in which the employer shall inform the Certifying Officer, and then such model standing order shall be deemed to be the certified standing order of the establishment if the Certifying Officer approves (who can also make certain modifications).

Amendment process

Section 30(4) of the Code provides for the process of making modifications in the standing order. The process for modifications remains the same as stated above for draft standing order wherein the employer proposes the draft to the Certifying Officer, who then takes recommendations from trade unions and representatives and accordingly approves or rejects the modifications.

Remedies for employer

In case the modifications that have been applied for by the employer are rejected then he has certain remedies as discussed below.

Appeal

The first and most basic remedy which the employer can exercise is filing an appeal with the appellate authority under Section 32 of the Code. It states that if the employer is not satisfied, “he may file an appeal within sixty days of receipt of the order of the certifying officer to the appellate authority appointed by the appropriate Government, by notification, and such authority shall dispose of the appeal in such manner as may be prescribed”.

Rule 12 of Draft Industrial Relation (Central) Rules, 2020 provides that the appellant should prepare a memorandum of appeal in tabular format along with original provisions and proposed modifications and file it electronically with the authority within sixty days of receipt of the order of Certifying Officer.

Independent application

Further, if the appeal is not successful then the employer may prepare a fresh draft and file it again with the Certifying Officer following the procedure therewith, with the contention that there has been a change in circumstances. The same view has been taken by the Supreme Court of India in the case of Management Shahdara (Delhi) Saharanpurlight Railway Co., Ltd vs. S.S. Railway Workers’ Union (1969). It was held that though the decision of appellate authority could not be challenged in the civil court, yet the aggrieved party has the right to make a fresh application to the Certifying Officer.

Agreement between concerned parties

The employer may form an agreement with the employees or their representatives or trade unions to make modifications as per his desired modifications. Section 35 provides for a gap of six months between any modifications to be proposed, otherwise, there should be an agreement between the employer and employees resulting in which only the modifications can take place. Thus, if the parties agree, they may form an agreement and propose modifications to the Certifying Officer keeping in mind Section 35 of the Code and Rule 15 of the Draft Industrial Relation (Central) Rules, 2020.

Finality of the decision of the appellate authority

The decision of the appellate authority is final and binding. The provisions of the previous Act on standing order explicitly stated that the decision of the appellate authority shall be final and thus, recourse could not be taken in civil court. However, under the provisions of the Code, Section 32 which deals with the appeal and its disposal by appellate authority thereof does not say that the decision of the authority shall be final. It states that “such authority shall dispose of the appeal in such manner as may be prescribed”. Even on referring to the draft rules, it nowhere states that such a decision is final.

However, Section 97 of the Code states that “No civil court shall have jurisdiction in respect of any matter to which any provision of this Code applies and no injunction shall be granted by any civil court in respect of anything which is done or intended to be done by or under this Code.” Thus, from this provision, it can be interpreted that the decision of such appellate authority shall be final. Nevertheless, in the Management Shahdara case, it has been held that such appellate authority may review and change its decision if it deems it necessary on the grounds of fairness and reasonableness, even where there is no change in circumstances.

Nature and effect of certified standing orders

Rights and duties of employee and employer

The most basic feature of the certified standing order is that it lays down the rights and liabilities of the employer and employees during employment. It keeps into account all the matters stated in the First Schedule and thereby sets their duties towards each other throughout the term of employment.

Binding effect

Once the standing orders are certified, they have a binding effect on both the employer and employee. All the terms incorporated in the certified standing orders such as payment of wages, mechanism of payment, shifts, classification of employment, etc. should be compulsorily followed by both the employer and employee. In case of non-compliance either by the employer or employee, they can take recourse through the Industrial Tribunal as provided in the Code.

As held in the case of Premier Automobiles Ltd. vs. Kamlekar Shantaram Wadke of Bombay & Ors. (1976), Industrial Employment (Standing Orders) Act, 1946, and Industrial Disputes Act, 1947 are sister enactments (which are now part of the same code) and recourse can be taken under the latter act if the former does not provide for any mechanism. Thus, certified standing orders are binding on the employer and employees and can be enforced through the Industrial Tribunal in case of non-compliance. Since the two enactments are now part of the same code, there will be no difficulty in enforcement.

Conformity with Model Standing Order, First Schedule, and Industrial Relations Code

The certified standing orders should conform to the First Schedule which states the eleven matters based on which the standing orders should be prepared. Further, it should also conform with the model standing orders prepared by the central government under Section 29(1) of the Code. Lastly, the certified standing orders are always made following the Industrial Relations Code, 2020.

Statutory imposition

The nature of the certified standing orders is in the form of statutory imposition. However, they are not to be construed as statutory provisions, and thus, they are not to be taken as law. In the case of Rajasthan State Road Transport Corporation v. Krishna Kant (1995), it was held that “The certified Standing Orders framed under and in accordance with the Industrial Employment (Standing Order) Act, 1946 are statutorily imposed conditions of service and are binding both upon the employers and employees, though they do not amount to statutory provisions”.

Fair and reasonable

The certified standing orders should always be fair and reasonable. Section 30(7) makes it the duty of the Certifying Officer to “adjudicate upon the fairness or reasonableness of the provisions of any standing orders keeping in view the provisions of the model standing orders”.

Overriding effects

It has been confirmed by the courts on various occasions that certified standing orders have an overriding effect on any agreement such as a letter of appointment if the latter is contrary to the former. In the case of Western India Match Co. Ltd. v. Workman (1973), the Supreme Court has held that if there is any inconsistency between certified standing orders and an agreement, the former would prevail over such terms of the contract of service, for the reason that, certified standing orders have the force of law whereas there is no legal sanction in case of an agreement. This has been reaffirmed by the Rajasthan High Court in the case of Eicher Goodearth Ltd. v. Rajendra Kumar Soni and Another (1993) where the High Court held that certified standing order has the power to override the letter of appointment wherein there was an inconsistency between the two in provisions relating to probation.

Penalty for non-compliance

Section 86(11) of the Code prescribes that an employer can be punished with a fine ranging between one lakh to two lakhs in case he does not comply with the finally certified standing order.

Conclusion

The Industrial Relations Code, 2020 has had a significant change in the laws relating to standing orders. As a result of the compilation of the three Acts, now an employee can take resort under the same legislation unlike before. As regards the finality of the decision of the appellate authority, such decision is final and no remedy lies against such order in a civil court. Lastly, different points have been discussed which signify the nature and effect of the certified standing orders such as its binding nature on employers and employees, statutory imposition, conformity with the law, penalties for non-compliance, and much more.

References

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