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The Union authorities precocious notified the implementation of the 4 Labour Codes, including the Industrial Relations Code (IRC), 2020, with effect from November 21, 2025, and they are expected to go afloat operational by April 2026. The IRC lays down provisions for employment information for concern workers, successful summation to addressing concern disputes.
One of the astir contentious changes successful the IRC from its predecessor, the Industrial Disputes Act (IDA), 1947, is the relaxation of job-security thresholds, allowing establishments with up to 300 workers to transportation retired layoffs, retrenchments, oregon closures without authorities permission, whereas earlier this exemption applied lone to establishments with less than 100 workers. Though respective States specified arsenic Rajasthan, Madhya Pradesh, Jharkhand, Andhra Pradesh, Haryana, and Assam had already amended their laws successful the past decennary to rise this threshold since labour was connected the Concurrent List successful the Constitution, the nationalist adoption of this flexibility has revived statement astir its implications.
It is important, astatine this moment, to sermon erstwhile and nether what circumstances these employment information provisions were introduced successful the archetypal place, to admit their relevance and value successful the contiguous property of artificial intelligence. The size threshold connected restrictions to downsizing was not portion of the IDA, 1947, until Chapter VB was added done an amendment during the Emergency, requiring firms with 300 oregon much workers to question authorities support earlier downsizing, a determination wide seen arsenic a effect to the unprecedented question of occupation losses during the Emergency years, shows existing probe connected this issue. Employment-security provisions were, therefore, not arbitrary regulatory hurdles introduced arsenic regular regularisation but arsenic crisis-response tools, designed to forestall employers from engaging successful wide labour displacement during periods of technological, political, oregon economical shock. The 1982 amendment lowered the applicability threshold to 100 workers.
As firms witnesser accelerated advances successful automation and AI, the unit to substitute labour with superior is intensifying crossed sectors. The workforce faces heightened vulnerability, particularly arsenic AI enables unprecedented forms of task replacement, adjacent successful skilled services and, much so, successful managerial and supervisory roles. Recalling oregon diluting these protections makes it easier for firms to downsize and regenerate workers with AI-enabled systems, expanding occupation insecurity and vulnerability. Though the explanation of “worker” successful the IRC has expanded to see income promotion employees, moving journalists, and supervisory employees earning up to ₹18,000 a month, it inactive excludes managerial employees and supervisory unit earning supra this limit. Moreover, a ample stock of ceremonial workers successful the services sector, including the accusation exertion sector, autumn extracurricular the scope of job-security provisions nether the IRC.
Business-friendly labour regime
The Centre’s determination to rise the job-security threshold from 100 to 300 workers nether the IRC, 2020, reflects a well-calculated strategy to awesome a displacement toward a much business-friendly labour regime, portion avoiding an explicitly anti-labour stance by continuing to support workers successful larger establishments. However, it remains important for the authorities to show labour-market conditions, sphere the enactment of discretionary use, and temporarily grow the sum of employment-protection provisions if a surge successful occupation losses warrants it. Embedding specified a mechanics successful the IRC oregon its State-level adaptations volition connection reassurance to workers and unions. Jharkhand and Haryana had explicit provisions successful their IDA amendments successful 2016 to summation coverage, provided that attraction of concern bid oregon prevention of the victimisation of workmen truthful requires. The IRC already allows the authorities to unbend its provisions by exempting caller establishments successful the nationalist involvement to beforehand flexibility. By the aforesaid logic, the codification should besides empower the authorities to temporarily grow sum erstwhile wide occupation losses endanger workers’ security. Including specified a safeguard would equilibrium pro-business flexibility with public-interest accountability during periods of wide displacement. A commendable measurement supporting this equilibrium is the further proviso of the Worker Re-Skilling Fund, which requires employers to lend an magnitude adjacent to 15 days’ last-drawn wages for each idiosyncratic they retrench, intended to assistance displaced workers upskill, reskill, and amended their employability.
Another country wherever the IRC could beryllium strengthened is successful providing clearer criteria for determining the employer-employee narration and, consequently, the applicability of employment-protection provisions. Whether employment-protection provisions use to declaration workers hired done third-party contractors depends connected judicially established tests of the employer-employee relationship. Judicial interpretations person favoured some employees (Hussainbhai Calicut v Alath Factory Thozhilali Union, Kozhikode and Ors., 1978) and employers (Joint Secretary, Central Board of Secondary Education and Another v Raj Kumar Mishra & Others, 2025). Given the fast-evolving flexible enactment arrangements done gig platforms, staffing agencies, freelancing, and third-party contractors, clearer statutory guidance connected narration classification is indispensable to trim uncertainty and amended service some employers and workers.
Gopal Krishna Roy is an Assistant Professor of economics astatine the Madras School of Economics. Views expressed are personal
