Major Compliance-related Changes under the Industrial Relations Code; State Rules are at different stages of finalisation

As you may be aware, the Industrial Relations Code, 2020 (“IR Code”) has been enforced with effect from 21^st November, 2025. Given that the Central Rules and most of the State Rules are not in force, there are practical challenges for the organisations to comply with the mandates under the IR Code. As of now, only Karnataka, Arunachal Pradesh and Gujarat have notified the Rules under the IR Code. The Centre and all the other States are at different stages of drafting or finalizing the Rules. For the detailed status of all the Rules under the Labour Codes, please refer to the Labour Code Reckoner, 2025 on our website.

We are giving below a preliminary note in the form of comparative analysis of the compliances under the IR Code with the compliances under existing labour laws. We will continue to carry out similar and detailed thorough checks on other Rules as and when they come into effect and will continue to share further updates with you from time to time:

Major Compliance-related Changes under the Code:

Changes in provisions relating to Standing Orders

• With the IR Code gaining effect, the threshold for applicability of Standing Orders to industrial establishments has been revised to 300 or more workers as against 100 workers;
• Penalty for not submitting draft standing orders has been increased to Rs. 50 thousand extendable to Rs. two lakhs. For continuing offence, an additional fine of Rs. two thousand per day may be imposed till continuance of the offence;
• Penalty for not maintaining display of the Standing Order has been raised from Rs. 100 to Rs. one lakh;
• Penalty for non-submission of prescribed documents has been revised from Rs. 5,000 to minimum of Rs. 50,000 up to Rs. two lakhs. For continuing offence, an additional fine of Rs. two thousand per day may be imposed till continuance of offence;

Changes in provisions relating to Industrial Disputes

• Penalty for not forming Works Committee and for not maintaining muster roll has been increased to Rs. one lakh;
• The number of members required to form a Grievance Redressal Committee has been increased from six to ten and the penalty for not forming a Grievance Redressal Committee has been increased to Rs. one lakh;
• The format of the notice of change in conditions of service which has to be given to the workers has been revised and penalty for failing to send such notice has been increased to Rs. one lakh;
• Penalty for failing to follow procedure for retrenching workers who are in continuous service for not less than 1 year has been increased to Rs. 10 Lakhs;
• Penalty for failing to pay compensation to workers in case of transfer of ownership has been modified to increase the fine from Rs. Rs. 1000 to up to Rs. two lakhs for first offence and fine up to Rs. five lakhs and/or imprisonment up to 3 months for subsequent offence;
• The provisions regarding lay off, retrenchment and closure were previously applicable to industrial establishments where 100 or more workmen were employed. The IR Code has now revised the threshold to include 2 separate chapters – Chapter IX lays down the conditions for establishments where more than 50 workers were employed on an average per working day in the preceding 12 months and Chapter X provides the conditions for establishments where not less than 300 workers are employed an average per working day in the preceding 12 months. The penalty for failing to follow the prescribed procedure regarding retrenchment has been increased from Rs. 100. to Rs. one lakh;
• Penalty for failing to pay compensation to workers in case of lay-off has been modified to increase the fine from Rs. 100 to up to Rs. two lakhs for first offence and fine up to Rs. two lakhs and/or imprisonment up to 6 months for subsequent offence;
• The format for providing a notice of lock out and serving a notice of closure has been revised.

Please note that the compliances for Karnataka, Gujarat and Arunachal Pradesh will be made available on Komrisk by end of this week.

For regulatory updates and update-related services, drop a mail at inquiries@lexplosion.in.

Source: Ministry of Labour and Employment