Industrial Relations Code, 2020: Latest Updates, Standing Orders, Retrenchment & an HR Compliance Guide (2026)

India’s Industrial Relations Code, 2020 (IR Code) consolidates and replaces key parts of three older laws—Trade Unions Act, 1926, Industrial Employment (Standing Orders) Act, 1946, and Industrial Disputes Act, 1947—with the stated aim of improving industrial harmony, simplifying compliance, and strengthening dispute-resolution mechanisms.

Latest Updates (What’s New in Practice)

1) Enforcement and government communication

As per government communication in late 2025, the IR Code has been positioned as part of a broader labour-code rollout, with emphasis on higher thresholds for prior permission in lay-off/retrenchment/closure and smoother industrial relations frameworks.

2) “Operational guidance” via FAQs and draft rules ecosystem

In early 2026, legal and compliance commentary noted FAQs and clarifications being issued around labour codes to reduce confusion and support implementation readiness across employers and workers.

HR takeaway: Even where internal SOPs already exist, organisations should align documentation, templates, and workflows to the IR Code language—especially for standing orders, separation, and dispute-handling.

Standing Orders Under the IR Code

What are Standing Orders?

Standing Orders are written rules that define conditions of employment—classification of workers, attendance, leave, misconduct, disciplinary procedures, termination, grievance handling, etc. The IR Code retains the concept but changes the applicability and administration.

Key change: Applicability threshold increased to 300 workers

A major shift is that mandatory standing orders apply to industrial establishments with 300 or more workers (based on employment on any day in the preceding 12 months). This is widely discussed as a move to reduce compliance burden for mid-sized establishments.

Model Standing Orders and certification approach

The Code contemplates Model Standing Orders as a baseline, with processes for adopting/modifying certified standing orders. Employers should plan for:

mapping existing HR policies to the model framework,
building a “standing orders vs HR policy” crosswalk,
ensuring disciplinary procedures, suspension subsistence allowance, and domestic enquiry steps are documented and consistently applied.

Practical tip: Even if your establishment is below 300 workers, well-drafted standing-order-like policies still reduce disputes—because they create predictability and show procedural fairness.

Retrenchment & Separation: What HR Must Know

1) Prior permission threshold raised to 300 workers

For certain industrial establishments, the IR Code sets prior government permission requirements for lay-off, retrenchment, and closure at 300 or more workers (states may have flexibility to raise this threshold further, as discussed in official and policy explainers).

HR impact: Workforce restructuring in large establishments must be planned as a compliance project (timelines, documentation, approvals), not just an HR decision.

2) Worker Re-skilling Fund: an added employer obligation

The IR Code introduces a Worker Re-skilling Fund concept, with commentary noting that employers must deposit an amount linked to 15 days’ wages per retrenched worker (reported with a deposit timeline in practical guidance).

HR impact: Budget for this cost alongside statutory retrenchment compensation and notice pay. Update separation checklists and finance workflows.

3) Retrenchment process hygiene (risk reduction)

Even where “permission” is not required, retrenchment disputes typically arise due to poor records or inconsistent process. HR should ensure:

objective selection criteria (role redundancy, skill mapping),
documented alternatives explored (redeployment, training),
clear communication and full-and-final settlement accuracy,
well-maintained muster rolls, wage records, and service certificates.

HR Compliance Guide (Action Checklist)

A) Policy & documentation

Standing orders readiness: If you are at/near 300 workers, prepare drafts aligned to Model Standing Orders and map all HR policies to them.
Disciplinary policy: Ensure misconduct definitions, enquiry steps, and appeal processes are explicit and consistently followed.
Union/worker relations SOP: Put in writing how management engages with unions/worker representatives and how minutes, undertakings, and settlement terms are stored.

B) Workforce change controls (retrenchment/closure/lay-off)

Threshold check: Track rolling headcount to determine if the “300+” triggers apply for your establishment type. Approval workflow: Build a “permission-required” playbook—internal approvals, legal review, government submissions, timelines, and contingency planning.
Reskilling fund compliance: Add Worker Re-skilling Fund calculations and payment proof to separation files.

C) Dispute prevention & handling

Grievance-to-resolution pipeline: Track complaints with dates, actions, and closure notes—many disputes escalate because employers can’t show “what happened when.”
Training: Train HRBPs and line managers on domestic enquiries, documentation discipline, and communication during restructures.

Bottom Line

The IR Code’s biggest operational shifts for HR are the 300-worker threshold for standing orders and prior permission in lay-off/retrenchment/closure, plus added cost-and-process items like the Worker Re-skilling Fund.