Analysis of the Labour Code on Industrial Relations Bill – Part I (Trade Unions)

Editor’s Note: A group of faculty and students of the National University of Juridical Sciences, led by Prof. Saurabh Bhattacharjee, prepared a report on the Labour Code on Industrial Relations Bill, 2015. In a series of blog posts, the authors analyze the draft bill based on their report. This post is written by Sohini Chatterjee and Vasujith Ram, and examines the provisions relating to trade unions.


In this post, we comment on matters relating to trade unions in the Labour Code on Industrial Relations Bill, 2015 (‘Draft Code’ or ‘Code’). As per the Code, the erstwhile Trade Union Act, 1926 would stand repealed, and would instead be replaced by the provisions of the Code.

Requirements for Registration

The provision relating to requirement for registration makes several changes from the corresponding provision in the Trade Union Act, 1926 (S. 4). From a reading of the new Draft Code (S. 5(1)), it appears that at least 10% of the members of the establishment or industry must be members of the Trade Union seeking registration. The existing alternate threshold of 100 members has been removed without providing any explanation. The first proviso permitting 100 members to apply is only for the purpose of making the application. A minimum of 10% of the members of the establishment or industry have to be members of the Trade Union to qualify it for application.

Earlier, 7 or more members would have sufficed to apply for registration. The Draft Code however mandates that 10% or 100 members, whichever is less, are to be the applicants. In large establishments, this would inevitably mean that 100 members must be applicants for registration. This is inexplicable, especially in light of the amended requirement that the applicants must submit a copy of resolution authorizing applicants to apply (S. 6(1)(c) of the Draft Code).

The amendments relating to removal of the 10% threshold for the unorganized sector and the clarification with respect to Trade Union of employers are appreciated (S. 5(b) of the Draft Code). It has been rightly noted that employee-employer relationship is unclear in the unorganized sector, and thus the threshold has been inapplicable.

Rules of the Trade Union

In the clause relating to the provisions to be contained in the constitution and rules of the trade union (S. 9 of the Draft Code), a few changes have been made, notably with respect to subscription fee for members (provided for in a separate Section; also alternatively creating a general welfare fund) and office duration for members of the executive (reduced from 3 years to 2 years). The latter (S. 9(i) of the Draft Code) needs to be explained with reasons.

Recently, the Supreme Court of India in Charu Khurana v. Union of India, held that “A clause in the bye-laws of a trade union, which calls itself an Association, which is accepted by the statutory authority, cannot play foul of Article 21.” Thus, it may be useful to add a clause that the rules or bye-laws of the trade union must not be inconsistent with the constitution in letter and spirit.

Registration and Certification of Trade Unions

With respect to registration and certification of Trade Unions (S. 10 and S. 11 of the Draft Code), it is observed that a 60 day limitation period for the decision for the Registrar has been appreciably added. It has also been rightly provided that the Trade Union will be deemed to have been registered in case of non-communication of the decision of the Registrar within 60 days.  However, a couple of aspects may be clarified:

  1. If the Registrar communicates a decision to register the Trade Union, a certificate of registration is issued, and it is treated as “conclusive evidence” of registration (S. 10(2) of the Draft Code). However, what must be treated as “conclusive evidence” in case the Trade Union is deemed to have been registered due to non-communication of the decision within 60 days?
  2. Is the 60 day limitation period from the date of the original application? What if the Registrar sends the application back to cure defects – does the 60 day period or cycle begin again after curing the defects?

We also approve of the addition of clauses providing that: i) rejection of registration must be accompanied by reasons (a basic administrative law principle); ii) decision can be communicated electronically.

It must be clarified whether the applicant for cancellation can only be the registered trade union. For example, in Tirumala Tirupati Devasthanam v. Commissioner of Labour & Ors, the Devasthanam had applied to the registrar to cancel the registration of the trade union of its employees. The Supreme Court held that S. 10 of the IDA does not permit the Devasthanam to apply, and that only the trade union could do so. This position was reiterated recently in the case of R.G. D’Souza v. Poona Employees Union. There appears to be no objective reason to disallow applications by a different party to the registrar if there are grounds for cancellation. Even the appellate remedy under S. 13 of the Draft Code is also allowed only against refusal to register or cancellation. No remedy would be available to the employer or third parties even if there is a genuine case for cancellation of registration. The registrar, in any event, has to apply his mind and record reasons for cancellation (as provided by the Draft Code). Thus it is advisable to allow third parties to apply for cancellation.

S.13 of the Draft Code also states, “Any person aggrieved […]if the Registrar has not acted within 60 days on the application for registration may within such period as may be prescribed prefer an appeal to the Industrial Tribunal whose decision shall be final”. However, S. 11(2) of the Draft Code provides that there shall be deemed registration if the registrar does not act within 60 days. Thus it is unclear why a provision for appeal to the Industrial Tribunal needs to be provided.

Office Bearers of the Trade Union

While a few grounds for disqualification to be office bearer of trade unions have been added (such as being an office bearer in 10 other trade unions as well as order of Industrial tribunal), an important clarification has to be issued. In Section 25, a clarification needs to be issued with respect to what happens when a sitting member, who has been convicted, gets a stay on conviction? Does he retain his office or does he have to apply or contest again? This is an issue what the Election Commission of India has been grappling with, in the light of the judgment in Lily Thomas v. Union of India.

S. 27 of the Draft Code drastically reduces the allowed proportion of office bearers not engaged in the establishment or industry. For the unorganized sector, the earlier threshold was half, i.e., the number of officer bearers not engaged in the establishment or industry could not be more than half (S. 22(1) of the Trade Union Act). The Draft Code provides that the maximum number can be two. For all other sectors, the Draft Code completely bars anyone not engaged in the establishment or industry from being an office bearer. This is a drastic reduction from the earlier permitted number of one-third of the office bearers or five, whichever is less (S. 22(2) of the Trade Union Act). This reduction needs to be accompanied with reasons or explanation, since this affects the autonomy of the trade unions. Many of the campaigns and advocacy efforts, interlinked with the process of collective bargaining, would need the support and advice of non-workers.

Adjudication of Trade Union Disputes

S. 26 of the Draft Code is a separate provision for adjudication of disputes of trade. The Industrial Tribunal is the adjudicatory body and the jurisdiction of the civil court is explicitly barred. It also states that the order/award of the Tribunal shall be final. A possibility of a provision for appeal may be explored.

S. 26(2) provides that the appropriate government may make an application to the Tribunal for ‘seizing’ the trade union dispute when it involves a question of ‘considerable’ importance. There is no indication in the statute as to what ‘seizing’ entails. This may affect the autonomy of trade unions and may amount to interference with the due process of law. Similarly, S. 26(3) provides a corresponding power to the Central Government in cases of disputes of national importance or if one of the parties to the dispute has offices in more than one state. The ‘or’ is perhaps a typographical error and must be changed to ‘and’.

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