Industrial Relations Code Amendment Act 2026: Three Labour Laws Repealed

The Industrial Relations Code (Amendment) Act, 2026, passed by Parliament in February 2026, marks a significant milestone in India's labour law reform journey. The amendment formally repeals three foundational labour statutes: the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947. These three laws, which governed trade union registration, employment conditions in industrial establishments, and the resolution of industrial disputes respectively, have now been consolidated under a single legislative framework. The amendment is part of the broader consolidation of 29 central labour laws into four codes, a process that began with the passage of the Code on Wages in 2019 and continued with the three remaining codes in 2020.

What Changed: The Three Repealed Laws

The Trade Unions Act, 1926 was India's oldest labour legislation, governing the registration and regulation of trade unions. The Industrial Employment (Standing Orders) Act, 1946 required employers in industrial establishments to define and publish conditions of employment, including working hours, leave, and disciplinary procedures. The Industrial Disputes Act, 1947 provided the framework for investigating and settling industrial disputes, including provisions for layoffs, retrenchment, and closure. By repealing all three and subsuming their provisions into the Industrial Relations Code, the government has sought to create a unified legal framework for industrial relations. The amendment also addresses certain interpretive ambiguities that had arisen since the original Industrial Relations Code was passed in 2020, clarifying provisions around strike notice periods, the definition of "worker," and the thresholds for government permission before retrenchment or closure.

Key Provisions and Employer Obligations

Under the amended framework, employers must ensure compliance with the consolidated provisions on trade union recognition, standing orders, and dispute resolution. The Code retains the requirement for establishments with 300 or more workers to obtain prior government permission before layoffs, retrenchment, or closure. For establishments below this threshold, a 60-day notice period applies for strikes and lockouts. The Code also introduces provisions on fixed-term employment, allowing employers to hire workers on fixed-term contracts with benefits equivalent to permanent workers, including gratuity on a pro-rata basis. The recognition of trade unions is now governed by a single set of rules, with a trade union requiring at least 10 percent membership of workers in an establishment to be recognised as a negotiating union. Where no single union meets this threshold, a negotiating council comprising representatives of unions with at least 20 percent membership must be formed.

Implications for Gig and Platform Workers

While the Industrial Relations Code primarily governs traditional employer-worker relationships, the broader labour code consolidation includes the Code on Social Security, 2020, which defines gig workers and platform workers for the first time in Indian statute. The National Social Security Board under that Code may recommend and monitor schemes for gig and platform workers. However, the Industrial Relations Code itself does not extend trade union rights or dispute resolution mechanisms to gig workers, a gap that labour advocates continue to highlight. The relationship between the four codes, and the extent to which gig and platform workers can access protections under each, remains an evolving area of law.

Industry Response and Criticism

Employer bodies have generally welcomed the consolidation for reducing compliance complexity. Operating under three separate statutes with overlapping provisions created uncertainty and litigation risk, particularly around the interplay between standing orders and industrial dispute mechanisms. The unified framework is expected to reduce regulatory friction for businesses operating across multiple states. Labour unions, however, have criticised the reforms as diluting worker protections, arguing that higher thresholds for government permission before retrenchment and the introduction of fixed-term employment make it easier for employers to terminate workers without adequate safeguards.

Practical Takeaways

Employers should review their existing standing orders, employment contracts, and internal policies to ensure alignment with the consolidated framework. HR teams and in-house counsel should map their current compliance obligations under the three repealed laws to the corresponding provisions of the Industrial Relations Code. Companies that employ fixed-term workers should ensure that benefits, including pro-rata gratuity, are being extended as required. Trade unions should assess whether their membership meets the new recognition thresholds. Given that state-level rules under the Code are still being notified in several jurisdictions, businesses operating across states should monitor developments closely and seek legal counsel where necessary.