What Happened
- An analysis has highlighted the need for the Industrial Relations Code, 2020 to be recalibrated to balance job security concerns arising from AI-driven automation.
- The government is being urged to monitor labour-market conditions, retain the option of discretionary intervention, and temporarily expand employment-protection provisions if AI-induced job losses surge.
- The article raises concerns that the current threshold of 300 workers for mandatory government approval before layoffs/retrenchment may be too high in an era when AI can displace large numbers of workers in smaller establishments.
- It calls for a flexible regulatory approach rather than a rigid one-size-fits-all framework.
Static Topic Bridges
Industrial Relations Code, 2020 — Key Provisions
The Industrial Relations Code, 2020 (enacted 28 September 2020) is one of four labour codes that consolidated 29 existing central labour laws. It subsumed the Trade Unions Act 1926, the Industrial Employment (Standing Orders) Act 1946, and the Industrial Disputes Act 1947. The Code raised the threshold for mandatory government approval for layoffs, retrenchment, and closure from 100 workers to 300 workers — a major change that increases employer flexibility to adjust workforce size without government permission.
- Enacted: 28 September 2020 (yet to be fully implemented as states frame rules)
- Laws subsumed: Trade Unions Act 1926, Industrial Employment (Standing Orders) Act 1946, Industrial Disputes Act 1947
- Key threshold: prior government permission for layoff/retrenchment/closure now required only for establishments with 300+ workers (raised from 100)
- Standing orders: applicable to establishments with 300+ workers (raised from 100)
- Fixed Term Employment (FTE): introduced as a legitimate employment form
- Trade Union recognition: 51% membership threshold for Negotiating Union status; 20% minimum for Negotiating Council membership
- Dispute resolution: new mechanism through Industrial Tribunal (two-member: judicial + administrative)
Connection to this news: The raised threshold from 100 to 300 workers means that establishments with fewer than 300 workers can now lay off workers without government approval. In the context of AI-driven automation, this could accelerate job losses in smaller firms without any regulatory check.
India's Four Labour Codes (2019-2020)
India consolidated its complex web of 29 central labour laws into four codes: (1) Code on Wages, 2019 — universal minimum wage, timely payment; (2) Industrial Relations Code, 2020 — trade unions, standing orders, disputes; (3) Code on Social Security, 2020 — EPF, ESI, maternity, gratuity, gig workers; (4) Occupational Safety, Health and Working Conditions Code, 2020 — workplace safety, working hours, inter-state migrants. While all four received Presidential assent, implementation has been delayed as states frame their respective rules.
- Code on Wages, 2019: floor wage by Central Government, minimum wage by appropriate government
- Code on Social Security, 2020: first time gig workers and platform workers included in social security framework
- OSH Code, 2020: consolidated 13 labour laws on workplace safety
- Implementation status: rules framed by most states, but full nationwide implementation pending
- Constitutional basis: Labour is on the Concurrent List (Entry 22-24, List III)
Connection to this news: The call to expand employment-protection provisions during AI-driven disruption would require amendments to the Industrial Relations Code or executive action under its discretionary provisions, highlighting the flexibility that the Code framework was designed to provide.
AI and the Future of Work in India
India faces a dual challenge from AI automation: while it creates high-skill jobs in AI development, data science, and machine learning, it threatens to displace workers in routine cognitive and manual tasks. The India Employment Report 2024 (ILO-IIHD) highlighted that 83% of India's workforce is in the informal sector, with limited access to social security or retraining programmes. The government's initiatives include the National Programme on AI (NPAI), AI missions in agriculture and healthcare, and skill development programmes through the Skill India Mission and National Education Policy 2020.
- India's workforce: approximately 56 crore (Census 2011 extrapolation)
- Informal sector share: ~83% of total employment
- Sectors most vulnerable to AI automation: BPO/IT services, data entry, basic manufacturing, retail
- Government response: Skill India Mission, PM Kaushal Vikas Yojana, National Programme on AI
- National Education Policy 2020: emphasis on digital literacy, computational thinking, AI integration
Connection to this news: The article's recommendation for discretionary government intervention during AI-driven job losses reflects growing awareness that existing labour law frameworks — designed for traditional industrial disputes — may be inadequate for technology-driven structural unemployment.
Key Facts & Data
- Industrial Relations Code, 2020: enacted 28 September 2020
- Threshold for government approval of layoffs: raised from 100 to 300 workers
- Laws consolidated into four labour codes: 29 central labour laws
- India's informal sector: ~83% of total workforce
- Fixed Term Employment: formally recognised under the IR Code
- Trade Union negotiating threshold: 51% membership for sole Negotiating Union
- Labour: Concurrent List (Entry 22-24, List III of Constitution)